The world's hedge fund industry managed to hold positive territory in May, figures show.

Hedge funds recorded gains for the third consecutive month in May, up by 0.4 per cent from April, according to figures from Chicago-headquartered Hedge Fund Research.

Strong performance in event driven strategies – such as those seeking to profit from corporate takeovers - was complemented by gains in relative value arbitrage and equity hedge strategies, which were only partially offset by declines in macro.

For the year so far, the HFR index is up by 0.74 per cent, topping most equity market indices, including the Nasdaq, Nikkei, FTSE, DAX and Shanghai Composite, while narrowly trailing the S&P 500 and DJIA.

The HFRI Asset Weighted Composite Index posted a similar gain of 0.3 per cent for the month, HFR said.

“Hedge funds posted gains for the third consecutive month in May, effectively navigating uncertainty associated with the upcoming Brexit vote, as well as shifting expectations of the timing and frequency of near term rate increases by the Federal Reserve,” said Kenneth Heinz, president of HFR.

“Hedge fund performance has continued to improve through a challenging environment for allocators, dominated by generally-flat equity markets, near zero interest rates (negative in many regions) and inverted swap spreads. Despite these, near-term catalysts such as Brexit and the Fed complement an already opportunity-rich landscape and are likely to contribute to an extension of recent gains through mid-2016, with hedge funds providing both performance leadership and portfolio protection toward achievement of full-year return targets,” he said.