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Komfie Manalo, Opalesque Asia:

The Morningstar MSCI Composite AW Hedge Fund Index gained 0.1% in April (+1.2% YTD, est.) compared to the S&P 500 which rose 0.7% while the small-cap Russell 2000 declined 3.9% in what was described as another month of divergent performance between large- and small-cap stock indexes.

Short-bias hedge funds benefited for the third straight month as overvalued stocks plummeted, especially in the technology sector. The Morningstar MSCI Short Bias All Size Hedge Fund Index increased 1.2% in April and 5.5% year to date.

The Morningstar MSCI North America Hedge Fund Index declined 0.2% in April and the Morningstar MSCI Small Cap Hedge Fund Index, which represents primarily small-cap long-short equity strategies, fell 1.0%.The two indices rose 11.5% and 16.1% respectively for the 12 months ended April 2014, while the S&P 500 and Russell 2000 Indexes increased 20.4% and 20.5%.

Morningstar’s fund analyst A.J. D’Asaro said, "Markets continued divergent performance in April. U.S. small-cap companies, traditionally a bulwark for hedge funds, declined further as investor sentiment reversed in small-cap growth stocks. European stocks, however, rebounded slightly on the Geneva agreement between Russia and the EU concerning Ukraine."

Indeed, ......................

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