Hedge funds generated solid returns in May

Hedge funds produced some solid numbers in May, according to the latest report from Morningstar Inc. in Chicago. The Morningstar 1000 Hedge Fund Index gained 6.7%, marking its biggest one-month gain since the index was launched in January 2003. Through the first five months of the year, the index was up 9.7%. The Standard & Poor’s 500 stock index gained 5.6% in May and is up 2.9% over the first five months of 2009. Emerging-market strategies continued to lead the way this year with a category average gain in May of 13.5% and a five-month gain of 25.2%. The worst performing category in May was short selling, which gained 1.8% for the month, but was still up 6.8% over the first five months. Global trends was the only subcategory with a negative return for the first five months of the year. It was down 2.2%, despite a 3.6% gain in May. The hedge fund of funds category was up 5.4% in May, and was also up 5.4% for the first five months of the year.