Hedge funds started the second quarter on a positive note, extending their March rally, Hedge Fund Research reported Friday.

The HFRI Fund Weighted Composite Index gained 1% in April, reversing a first-quarter loss. Year to date, hedge funds are up 0.3%.

The HFRI Asset Weighted Composite Index added 0.2% for the month, but this index is still underwater, down 2% for the year.

Fixed income-based relative value arbitrage strategies were the top gainers in April, up 2.1%, as credit and arbitrage deal spreads tightened and U.S. treasury yields rose for the month, HFR reported. This was relative value funds’ best monthly return since September 2009, raising performance for the year to 1.5%.

The HFRI event-driven index gained 1.5% in April, lifting year-to-date returns to 1%. Activist and distressed exposures led the way, up 3.2% and 3%, while merger arbitrage was down 0.8%.

Equity hedge funds advanced 1.3% in April, with a huge boost from energy and basic materials, which added 5.2%; the energy index is now up 9.2% year to date.

Emerging markets also contributed, up 2.3%, led by exposures to Russia and Latin America. Emerging markets funds, which burst out of a long slump in March, are now up 1.9% in the January-to-April period, but down 7.6% for the past 12 months.

Macro hedge funds declined by 0.3% in April, as the Japanese yen surged against the U.S. dollar and markets discounted a lower probability of a U.K. vote to leave the European Union, HFR said. The loss pared the year-to-date gain to 1.2%.

Funds of hedge funds were flat in April and are down 3% year to date.

“Despite this [April] recovery, downside risks associated with the Brexit vote, U.S. elections, surging Japanese yen and negative swap spreads still remain as potential catalysts for volatility in coming months,” HFR president Kenneth Heinz said in a statement.

“Since the market volatility increased in June 2015, the HFRI has outperformed U.S. equities in eight of 11 months, exhibiting strong capital preservation and positive optionality over this period. Continuation of these performance dynamics is likely to drive global industry growth through mid-2016.”

— Check out Ultra-Wealthy Tiger 21 Investors Push PE Allocations to All-Time High on ThinkAdvisor.