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By comparison, the S&P 500 Total Return Index was down 6.35% for the month. Year-to-date through the end of May, hedge funds returned 5.23%, while the S&P was up 10.59% on the year.

"Hopeful signs from U.S.-China trade talks vanished in the face of heightened tariffs and proved to be a drag on equity markets in May," said Sol Waksman, president of BarclayHedge. "The trade war and the accompanying decrease in oil prices further weighed down hedge fund returns."

While the overall industry was down in May, there were gainers among hedge fund sectors. Leading the way was the Option Strategies Index, up 1.93% for the month, followed by the Emerging Markets Eastern Europe Index and the Emerging Markets Eastern European Equities Index, both up 1.01% in May.

"Eastern Europe remains a strong economic story," said Waksman. "Economic expansion appears to be continuing in Poland, while first quarter growth in Romania exceeded projections and Hungary's first quarter growth was the strongest in almost 20 years."

Among the other sectors posting positive numbers in May were the Emerging Markets Global Fixed Income Index, up 0.74%, and the European Equities Index, with a 0.46% return for the month.

Far more sectors were in the red for May than in the black. The Technology Index was down 4.40% for the month, the Emerging Markets Global Equities Index, down 4.28%, the Emerging Markets Asian Equities Index, down 4.18% in May, and the Equity Long Bias Index dropped 3.47%.

Strong Eastern European economic performance showed up again in year-to-date returns. Through the end of May, the Emerging Markets Eastern European Equities Index was up 12.06% while the Emerging Markets Eastern Europe Index gained 11.17%. Other notable year-to-date gainers included the Healthcare & Biotechnology Index, up 11.90% on the year, the Emerging Markets Global Fixed Income Index, returning 9.95% year-to-date and the Technology Index, with an 8.15% return through the end of May.