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Year-to-date, the hedge fund industry is down 4.67% through May. The S&P 500 Total Return Index is down 4.97% over the same period.

All sectors but two tracked by the Barclay Hedge Fund Indices were in positive territory in May. The exceptions were the Merger Arbitrage Index, down 0.42%, and the Equity Market Neutral Index, losing 0.02% in May.

While bad economic news was present in abundance in May thanks to the COVID-19 pandemic, markets were encouraged by governments' and central banks' economic stimulus actions, the first stages of easing of pandemic-related shutdowns and hopeful signs in the effort to develop a vaccine for the novel coronavirus.

"Equity markets continued to seize on optimistic news as they rebounded from their initial pandemic downturn, while oil prices responded positively to the combination of production limits and renewed business activity," said Sol Waksman, president of BarclayHedge. "The result was another positive month for hedge funds."

With the world in the throes of a global health crisis, it's not surprising the Healthcare & Biotechnology Index set the pace among hedge fund sectors in May with a 5.74% return. Other leading gainers in May included the Technology Index, up 4.81%, the Pacific Rim Equities Index, gaining 4.62%, the Equity Long Bias Index, returning 4.14%, and the Event Driven Index, up 4.12%.

Most hedge fund sectors remained in the red year-to-date through May, though six sectors bucked the trend. Leading the year-to-date gainers was the Volatility Trading Index, up 10.42%, followed by the Technology Index, gaining 5.27%, the Fixed Income Arbitrage Index, returning 4.80%, and the Healthcare & Biotechnology Index, up 3.53%. Also posting year-to-date gains were the Option Strategies Index, gaining 2.48%, and the Global Macro Index, returning 1.58%.

Among sectors in the red for the year, some of the largest drops were in the emerging markets. The Emerging Markets Latin America Index was down 22.44%, the Emerging Markets Global Equities Index was off 14.83%, the Emerging Markets MENA Index lost 12.92%, the Emerging Markets Eastern European Equities Index was down 11.63% and the Emerging Markets Global Index was off 11.16%.