(SINGAPORE) The sharp rebound in the hedge fund space is here to stay, as managers head for their best nine-month performance in a decade, says Eurekahedge.

The latest data from Lipper also shows improved fortunes for global funds, with all hedge fund strategies except dedicated short-bias ending the month in positive territory.

The Eurekahedge Hedge Fund Index, which tracks more than 2,000 funds, went up 2.45 per cent in September - its seventh straight monthly gain, taking its year-to-date return to 16.1 per cent. The estimates are based on 52 per cent of the funds that reported performances.

The industry grew US$26.3 billion last month, taking total assets managed to US$1.42 trillion, the report shows.

Assets are expected to exceed US$1.5 trillion by the end of the year and the benchmark index is set to match 2003's 21 per cent return, Eurekahedge says.

'A series of positive US macro readings, the International Monetary Fund's upwardly revised forecast and rising M&A deals contributed to the stockmarket rally,' says Aureliano Gentilini, Lipper's global head of hedge fund research.

The MSCI World Index of 23 developed nations climbed 3.8 per cent in September, taking its year-to-September advance to 22 per cent.

Six of Eurekahedge's seven regional indices rose last month, with Eastern Europe and Russian funds leading the gains.

The measure that tracks Japan-focused hedge funds declined 1.13 per cent as the yen appreciated.

The Eurekahedge Eastern Europe and Russia Hedge Fund Index jumped 9.98 per cent, helped by energy industry gains in Russia and rising currencies in Eastern Europe.

The index that tracks emerging markets rose 3.6 per cent, while the North American index went up 2.9 per cent, on back-to-back gains by the Standard & Poor's 500 Index.

Lipper says the stellar performance of emerging markets performance arose from a weak US dollar, rising commodity prices and steady capital inflows. In particular, the S&P Global BMI Emerging Markets Index surged 8.55 per cent month-on- month.

Latin America outperformed all other emerging regions, with a gain of 10.86 per cent.

In terms of performance across different strategies, directional managers outperformed relative-value and event-driven strategies at the end of the month, says Lipper.

Emerging markets returned 1.96 per cent and long-bias gained 1.92 per cent. They were the best-performing strategies for September, with year-to-date returns of 18.94 per cent and 20.73 per cent respectively.

Convertible arbitrage yielded 1.76 per cent while long/short equity reaped 1.48 per cent.

Another top performer, Global Macro, gained 1.25 per cent.