Rallying equity markets, on the back of a sharp increase in risk appetites, coupled with marked reversals across some other asset classes were among the factors responsible for last month's strong returns.

The Eurekahedge fund of funds index ended the month up a healthy 1.1%, with positive returns across almost all regional and strategic mandates.

April witnessed sharp reversals across most asset classes, as risk appetite returned and money moved from safer-haven assets into riskier ones. Most major equity markets had a strong April. The MSCI World index rose 5%, with its emerging markets component up nearly 8%. North American equities returned 5%, as the Fed's rate cut in March coupled with their assistance in the Bear Stearns episode, boosted investor sentiment across the region. European equities fared well too, with the MSCI Europe returning 3.9% .

Most fund of fund strategies finished April in positive territory. The best returns came from long/short equity multi-managers (2.2%), as underlying equity-focused hedge funds largely benefited from rallying equity markets across the board. Arbitrage (1.1%) and relative value (1.7%) managers also recorded impressive gains, as hedge funds of both strategies benefited from the notable improvement of the convertibles space, and from some merger arbitrage trades.

CTA funds of funds outperformed the hedge fund index for the strategy, returning 0.7%, while macro multi-managers were up 1%; the former benefited from their investments in hedge funds that exploited commodity and currency movements during the month, while the latter made good gains, as underlying hedge funds capitalised on the sharp upturn across global equities, among other things.

Distressed debt funds of funds registered returns averaging 0.8% on the month, as a marked improvement in high yield space, among other things, worked to the benefit of hedge funds of the strategy. Event driven multi managers were up 0.5%, as underlying single managers were assisted by the presence of strategic-deals.

Multi-strategy fund of fund managers returned 0.9%, as investments in hedge funds of most strategies resulted in decent gains. Fixed income funds of funds were the only ones with negative average returns on the month, as the sluggish performance of bonds, among some other fixed income instruments - partly due to a sharp increase in risk appetites - negatively impacted the performance of fixed income hedge funds.

For the latest monthly returns and 2008 returns for the Eurekahedge hedge fund and fund of funds indices please visit www.eurekahedge.com/indices or contact editor@eurekahedge.com to comment on this report. Rajeev Baddepudi is hedge fund analyst with Eurekahedge in Singapore