Hedge funds have posted the largest monthly performance since February 2000 according to the Credit Suisse/Tremont Broad Hedge Fund Index. It returned 4.06% for May 2009, the third consecutive month of positive returns.

Over May all hedge fund strategies except dedicated short bias posted positive performance. Confirming the trend of the previous two months, the best performing hedge fund strategy was emerging markets, returning a solid 6.96%, while the worst performing strategy was dedicated short bias at minus 0.55%.

Monthly performance dispersion among the hedge fund strategy indices tightened in May to 751 basis points (bp) after peaking in April at 1,474bp.

The average performance for the 7,000 hedge funds tracked by Lipper was a positive 5.77% in May, 171bp above the index.

A record 143.81-percentage-point monthly performance difference in May divided the top and bottom performers of the hedge funds tracked by Lipper.