Before March, most indexes and research had shown hedge funds bouncing back this year, after a challenging 2011.

All five sectors in the Credit Suisse index posted negative performances, the lowest being Managed Futures which was down 1.41 per cent in March. The best performing strategy was Long/Short with a modest decline of 0.12 per cent.

The index logged a gain of 1.71 per cent for February, when all sectors had positive performances. The best performing sector was also then Long/Short with a 2.25 per cent gain. It is also the star strategy year-to-date with an increase of nearly 5 per cent.

Last year, hedge fund assets in total fell to $1.64 trillion, down by 7.7 per cent in 2011, and hit their lowest level since February 2010, according to TrimTabs and BarclayHedge data from February. At the same time, Chicago-based Hedge Fund Research has said that launches of new funds last year – 1,113 – represented the highest level since 2007, when 1,197 funds were rolled out.