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By comparison, the S&P 500 Total Return Index eked out a slim gain of 0.18% in May.

For the year-to-date, hedge funds were down -5.88% through May, bettering the S&P 500 Total Return Index which lost -12.76% over the same period.

Among hedge fund subsectors, the balance was tilted decidedly to those losing ground for the month, with approximately two-thirds of subsectors in the red for May.

Subsectors in positive territory for the month were led by the Emerging Markets Latin American Equities Index, which picked up 2.42%. Other gainers included the Emerging Markets Global Fixed Income Index 1.43%; the Volatility Trading Index 1.35%; the Option Strategies Index 1.00%; and the Global Macro Index, gaining 0.76%.

Subsectors posting monthly losses in May included the Emerging Markets Eastern Europe Index, which tumbled -6.79%, the Healthcare & Biotechnology Index -3.10%; the Fixed Income Arbitrage Index -2.27%; the Emerging Markets MENA Index -2.01%; and the European Equities Index -1.92%.

A majority of hedge fund subsectors are underwater on a year-to-date basis, though there are a few notable exceptions: The Global Macro Index is up 8.62% so far in 2022 and the Emerging Markets Latin American Equities Index has advanced 7.07%. The Emerging Markets Latin America Index has managed 3.44% followed by the Emerging Market MENA Index, up 1.55% and the Equity Market Neutral Index with 1.46%.

Among subsectors posting year-to-date red ink, the worst losses have been unsurprisingly in Eastern Europe. The Emerging Markets Eastern European Equities Index is down -39.24% as of the end of May followed closely by the Emerging Markets Eastern Europe Index, underwater -32.32%. Elsewhere, the Healthcare & Biotechnology Index has lost -17.88% of its value and the Technology Index has given up nearly as much (-17.44%). Emerging Markets managers in Asia are also navigating challenges in 2022. The Emerging Markets Asian Equities Index is down -13.44% and the Emerging Markets Asia Index is down -11.99% on the year. The Emerging Markets Index has shed -10.54% and the Emerging Markets Global Equities Index is down -10.36%.

"The investment environment remained a difficult one in May as stock markets experienced their longest slump in a decade - two decades in the case of the Dow - before rallying late in the month," said Ben Crawford, Head of Research at BarclayHedge. "While many macroeconomic metrics still appear favorable, there are some leading indicators beginning to flash recession warnings. The downturn in markets is but one of them. More worryingly is an apparent slowdown in China's output, linked unambiguously to its aggressive 'zero-Covid' policy stance. As the so-called 'factory to the world', a prolonged slowdown in China could further exacerbate production backlogs, worsening supply-demand imbalances and continue to drive prices higher. The ripple effects are capable of dampening production planning, hiring, market sentiment and consumer spending, which in turn could easily nudge the world into the swampy confines of a globalized stagflation."

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