The alternative index replication of Credit Suisse indicates that July was a positive month for hedge funds.

The continued increase of overall net exposure of long/short equity hedge funds in July enabled managers to capitalise early in the month on market upswings, said Dr Jordan Drachman, head of research for alternative beta strategies at Credit Suisse.

“As risk appetite returns to the market, many long/short equity hedge fund managers have increased their overall net exposures, which enabled them to generate positive returns as equity markets bounced back early in July,” said Dr Drachman.

“Despite mid-month volatility, managers were able to preserve gains to finish up for the month," he added.

Dr Drachman made these comments, as the Credit Suisse Long/Short Equity Replication Index finished up 1.96 per cent (net) for the month and the firm's Global Macro Replication Index finished up 0.03 per cent (net) over the same period, the Swiss bank said in a statement.

Alternative index replication indices seek to replicate the performance of major hedge fund strategies and enable investors to gain liquid, transparent insight into the global macro and long/short equity sectors of the Credit Suisse/Tremont Hedge Fund Index.

AIR indices are therefore considered good barometers of how well hedge funds are performing.