Hedge funds barely managed positive returns in May, according to the latest reading from the CSFB/Tremont Hedge Fund Index.

The index was up 0.15% for May, according to president of Credit Suisse First Boston Tremont Index LLC and senior member of the CSFB Hedge Fund Investments Group Oliver Schupp. “Despite speculation over the fate of the hedge fund industry after some challenges in the credit and convertible arbitrage sectors, the index reported a positive return in May and hedge funds generally fared better as the U.S. equities market rallied and the credit and convertible arbitrage sectors ended the month more positively than expected,” says Schupp.

“The Managed Futures sub strategy reported the highest return this month, up 3.62%, as many long-term trend followers profited from long positions in global bond and equity markets and fundamental programs continued to pay off,” he adds.

“The Event Driven sub strategy, which was affected by the credit downgrades in the automobile sector and represents a significant portion of the index, reported a positive 0.55%, bringing that sector up 2.29% year-to-date,” notes chief executive officer of Tremont Capital Management Inc. Robert Schulman. “The Dedicated Short Bias sub strategy reported its first negative return in 2005, as expected after the rally in equities,” he adds.

As of May 31, the CSFB/Tremont Hedge Fund Index is comprised of 409. Three funds – Wayland Recovery Fund, Pioneer Global Opportunities, and Weiss Total Return – were removed from the index because they are no longer reporting.

The CSFB/Tremont Investable Hedge Fund Index, which measures the six largest funds open for investment in each of 10 different strategies, was up an estimated 0.31% net for the month of May. For April, it was down 1.08% net.