Emerging markets hedge funds, which had languished for months, erupted with a 6.9% return in March, according to data released by Hedge Fund Research, leading the HFRI Fund Weighted Composite Index to its strongest gain in more than a year, up 1.8%.

The index, however, finished the first quarter down 0.8% after sustaining a steep loss in January.

Emerging markets funds’ March performance, their best since May 2009, erased a big loss in January, and raised their first-quarter return to 0.8%. For the past 12 months, the funds are down 3.5%, and for the past 60 months, down 1.2%.

Regional emerging markets strategies posted the strongest industrywide performance in March. The Latin America index gained 14.5%, a 15-year high. Similarly, the Asia ex-Japan index added 6.8%, and the Russia/Eastern Europe index returned 6.7%.

Hedge fund strategies with exposure to global equities produced strong gains in March as equities bounced back from steep losses from the first half of the first quarter.

The HFRI equity hedge index finished the month up 3.4%, its strongest monthly performance in more than four years. It is down 1.7% for the quarter.

“Equity and emerging market hedge funds led strong gains in March to conclude a volatile first quarter with two clear and distinct market cycles including a six-week equity, commodity and EM selloff to begin 2016, and an ongoing recovery from that selloff,” HFR president Kenneth Heinz said in a statement.

“Conservative positioning and trend-following exposures served to insulate portfolios from declines intra-quarter, while resurgent equity and emerging markets posted strong gains to conclude the quarter.”

Fixed income-based relative value arbitrage strategies also posted strong performance in March, with the HFRI relative value index gaining 2.3%, its best monthly return since September 2009. HFR attributed this to investors discounting the dovish comments from the US Federal Reserve.

As high-yield credit and arbitrage deal spreads tightened, the HFRI event-driven index advanced 2.7% in March. The special situations subindex added 4%, while the activist subindex gained 3.1%.

Macro hedge funds came in losers in March, down 1.4%. Macro, however, was still the leading strategy area of hedge fund performance in the first quarter, up 1.2%, after having recorded strong gains in January and February.

Quantitative, trend-following commodity trading advisor strategies were the leading contributors to macro declines, down 2.8% for March, but up 2.2% for the quarter.

“Macroeconomic volatility is expected to remain high, with drivers including the Brexit vote, U.S. elections, the surging Japanese Yen and M&A fallout from the collapse of the proposed Allergan transaction,” Heinz said.

“As a result, hedge funds are likely to remain strategically conservative and tactically opportunistic, adjusting exposures dynamically and continuously as trends develop and evolve.”

— Check out Blackstone to Shut Mutual Fund After Fidelity Pulls Out on ThinkAdvisor.