Are Hedge Funds A Better Place To Put Your Money?

Year-to-date returns:

For the first quarter, U.S. Several Strategies and U.S. Market Timers followed with 7.5 percent and 7.3 percent returns, respectively. See strategy and sector definitions.

Large cap stocks powered the rise of the Dow Jones Industrial Average. The Dow returned 5.3 percent in March and the S&P 500 returned 4.0 percent, while Russell 2000 returned 1.5 percent.

On a year-to-date basis, the Dow is up 7 percent, while the S&P 500 has gained 5 percent. The Russell 2000 is down 5.4 percent.

Most hedge-fund managers tend invest in small- and mid-cap stocks. These numbers mean that hedge funds for the most part are outperforming the Russell 2000, perhaps a more meaningful benchmark.

It also appears that hedge funds have been capitalizing on significant shifts in emerging and rebounding markets. Globally, as economic conditions stabalize, the improvements could translate into increased US imports which would bring gains for managers of all types of funds. Van believes that hedge fund managers are more able to act on these improvements quickly. Thereby contributing to a second consecutive quarter of gains. "What they're doing is making markets more efficient. One thing people are blaming hedge funds for is making bad things happen," Van says. What they're doing is acting quickly on available information, he says. "What we're seeing is an acceleration of market discipline. The market is much quicker to punish or reward countries and companies for their policies," Van says.

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