Hedge funds were up 4.17 per cent in October after several months of decline, according to the Credit Suisse Liquidity Alternative Beta Index.

The so-called LAB index, which aims to reflect performance across the industry, indicates that hedge funds regained some of their year-to-date losses in the third quarter, according to Dr Jordan Drachman, head of research for Alternative Beta Strategies at Credit Suisse.

“The event-driven sector saw the most significant gains, finishing up 7.80 per cent as managers increased exposure to high conviction investments during dislocations,” said Dr Drachman. “Meanwhile, the managed futures strategy fell 4.42 per cent for the month as trends reversed against many long-term positions.”

Managed futures is the worst-performing sector in 2011 so far this year, down 3.79 year-to-date. The merger arbitrage range, which gained 1.48 per cent in October, is the best-performing strategy in 2011 and is up 3.58 per cent.