The Credit Suisse/Tremont Hedge Fund Index has released its Q1 report, revealing that despite continued market volatility, hedge fund returns appear to have stabilised.

The report show funds posted gains of 0.9 per cent between January and March. This is compares favourably with a loss of 13 per cent in the MSCI World Index and a 3 per cent decline in the Barclays Global Aggregate Bond Index.

The Swiss bank also published a new research paper based on the report Q1 2009 Update: Hedge Funds Gain Traction in First Quarter.

This outlines how, despite positive performance, overall assets under management for the industry declined an estimated $163 billion between January and March. Total industry assets are now estimated at $1.3 trillion, as of March 31.

At the same date, the paper reveals that an estimated 17 per cent of funds were classified as impaired. This means they have either imposed gate provisions, suspended redemptions or sidepocketed assets.

Global macro, managed futures and convertible arbitrage are also highlighted as having gained momentum and increased investor interest.

The paper also says further consolidation of the hedge fund industry seems likely, potentially leaving surviving funds better positioned to capitalise on alpha generating opportunities. It predicts investors will increase their focus on liquidity, transparency and cost efficiency.  

Credit Suisse is active in over 50 countries, employs approximately 47,800 people and is headquartered in Zurich.