The Eurekahedge Hedge Fund Index was up 0.20% in March, with the year-to-date return at 1.33%. This makes March the ninth consecutive positive month for the hedge fund industry, as managers navigated successfully through turbulent market conditions. The MSCI World Index was down 1.53% during the month.

Highlights for March:

• Strong launch activity was witnessed in the first quarter of 2011, with more than 150 funds launched globally.
  
• Japanese hedge funds outperformed Nikkei 225 by 7.32% in March 2011.
  
• Hedge funds with exposure to fixed income assets outperformed in the first quarter of 2011, with distressed debt managers up nearly 4% March YTD.
  

All regions outperformed their underlying market indices in a month that started off with declines in global markets due to discouraging reports about the European debt situation, Chinese economic data and continued political tensions in the Middle East. The disastrous earthquake and tsunami in Japan on the 11th of March, and the subsequent crisis at the Fukushima Daiichi nuclear power plant, then led to a sharp sell-off in markets around the world.

Asia ex-Japan hedge funds delivered the best performance among the major hedge fund regions, gaining 2.21% in March. The MSCI AC Asia Pacific Ex Japan Index climbed 3.66% as a number of underlying markets posted significant gains. The BSE Sensex rose 9.1% on the back of strong foreign investment flows, while South Korea's Kospi and Thailand's SET gained 8.63% and 6.03%, respectively. Chinese markets also posted a strong recovery near the month-end, with the Hang Seng returning 0.81% and the Shanghai Composite gaining 0.79%. Among the other regions, returns from North American hedge funds were flat for March, while Japanese managers delivered excellent downturn protection amid sharply falling markets. Japanese hedge funds lost 0.86% on average in March, while the Topix and the Nikkei 225 lost 8.61% and 8.18%, respectively.

Most strategies finished the month with slight gains, with relative value managers providing the best return, up 1.00%, making it the 10th consecutive month of positive returns. All strategies with exposure to fixed income assets posted gains in March as the bond prices rallied following the situation in Japan. Multi-strategy funds gained 0.84% during the month while CTA/managed futures funds were down 1.03% due to erratic movements in currencies and energy markets, as well as losses from agricultural commodities.