Hedge funds returned an average 5.2 percent in May, the best performance in more than nine years, as they attracted more money and global markets rallied, Eurekahedge Pte said. The Eurekahedge Hedge Fund Index, tracking more than 2,000 funds, has advanced 9.2 percent this year, according to a preliminary report by the research firm based on the 27 percent of funds that reported May performance. The industry recorded net inflows for the first time in 10 months in May, gaining $1.5 billion, while total assets rose by $5 billion, the report said.   more »

India will introduce exchange-traded interest-rate futures to provide a mechanism to institutions and households to hedge their interest-rate risks. The contract will have 10-year government bond with a 7% semiannual compounding notional coupon rate as the underlying security, the Reserve Bank of India and the Securities and Exchange Board of India said in a joint report on interest-rate futures. The size of a single contract will be 200,000 rupees ($4,196) and the maximum maturity of the contract will be 12 months, it said. The contracts will be traded on the currency derivatives segment of a recognized stock exchange, the report said.   more »

Better fasten those seat belts, investors, because if hedge fund managers have any insight at all, the credit crunch and market turmoil may not be over yet. About 800 gathered for the GAIM International hedge fund and alternative investment event in Monaco.Russell Abrams, founder and senior portfolio manager of Titan Capital Group, which manages hedge funds using volatility arbitrage strategies, said 2009 could shape up as mirroring 2008 somewhat.As for the major currencies in the short term, he said the dollar will benefit as stimulus efforts begin to kick in: "I feel once [stimulus efforts] they start to bite, the American economy is ready to go and could go really, really strongly." But for the longer run, Leskinen said, the strength is not that convincing. "I think the shift of the world's economies has gone to China and India and these BRIC (Brazil, Russia, India and China) economies. They are the new economy superpowers in the economic world.   more »

Asia-based hedge funds will see a turnaround in inflows in the third quarter as investor confidence returns, but new players may still struggle on concerns over risk controls in the scandal-hit industry. Like their counterparts in Europe and North America, Asian hedge funds have suffered heavy redemptions since Lehman Brother's collapse in September and the Madoff fraud spooked investors and spurred a retreat to safer assets. But the pace of withdrawals is slowing, and several industry players predict Asian hedge funds could see net inflows during the second half of 2009, judging by expressions of interest by potential investors and requests for research and due diligence. Lipper's Gentilini estimates that in a post-Madoff era, new funds may need $250 million in assets under management to generate enough fees to cover the overheads needed.   more »