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“After eight months of steady gains, the Barclay Hedge Fund Index fell back in May,” says Sol Waksman, founder and president of BarclayHedge.

“Continuing turmoil in the Middle East, tightening in China, Eurozone concerns and the US debt ceiling debate all contributed to investor jitters and a resultant flight from risk assets.”

Thirteen of Barclay’s 18 hedge fund indices were down in May, while five held their ground or advanced. The Emerging Markets Index took the biggest fall, losing 4.08% in one month.

“Emerging market equities took a double-barreled hit in May as concerns of a slowing recovery in the US coupled with a sharp sell-off in commodities,” says Waksman.

The Equity Long Bias Index lost 1.70%, Pacific Rim Equities lost 1.40%, Global Macro was down 1.04%, and the Multi Strategy Index slid 0.64%.

On the positive side, Equity Short Bias reversed its downward trend with a 2.02% gain.

“The decline in both US and international stock markets gave Equity Short Bias a boost in May, while sending most other equity indices downward,” says Waksman.

“Equity Short Bias Index marked its first gain since August of 2010, breaking a string of eight straight months of losses.”

Healthcare & Biotechnology was up 1.57%, Fixed Income Arbitrage gained 0.47%, and the Merger Arbitrage Index was up 0.39%.

The Healthcare & Biotechnology Index has gained 8.66% in the first five months of 2011, leading all hedge fund strategies tracked by BarclayHedge.

The Barclay Fund of Funds Index lost 1.15% in May, but remains up 0.78% for the year.

(press release)

Full performance table: Source