Hedge fund returns rebounded in April after starting the year with the worst performance in nearly two decades, Bloomberg reported, citing data from Hedge Fund Research, the Chicago-based research company. Overall hedge fund returns increased 1.5 per cent for the month ended 28 April, according to Chicago-based HFR’s Global Hedge Fund Index, which is updated daily with a two-day delay. Funds dropped 2.46 per cent in March and 3 per cent in the first three months of the year, according to HFR's weighted composite index. Hedge funds benefited as stocks rose in April. The Standard & Poor's 500 Index gained 5.2 per cent in April. Volatility eased from March, when it was the highest in five years. But although returns recovered in April, a number of hedge fund firms are still licking their wounds as a result of a poor first quarter and losses from 2007. Drake Management, a New York firm, is shutting its largest hedge fund, according to a letter to investors, Bloomberg said. It plans to start a new fund later this year. Drake said it is winding down the $2.5 billion Global Opportunities Fund after it lost 25 per cent last year and investors asked to pull money. The firm's managers, Anthony Faillace and Steve Luttrell, will decide on the fate of its two other hedge funds by the end of the May. They will continue to manage $8 billion in traditional fixed-income accounts.