LONDON, April 15 (Reuters) - Assets held by European hedge funds hit record high levels in the first three months of this year, data showed on Tuesday, a sign of investor confidence in the region.
Data from industry tracker Eurekahedge showed hedge funds in Europe managed a record $476.2 billion by the end of March, surpassing the previous high of $473 billion hit in October 2007, as investors look to tap into the region's gradual recovery.
Globally, hedge funds eked out returns of 0.9 percent in the first three months of 2014. This beat the 0.6 percent posted by the MSCI's All-Country World Stock Index but underperformed the 1.3 percent growth shown by the Standard & Poor's 500 and the FTSEurofirst 300 share indices over the same period.
After posting gains the month before, hedge fund returns took a hit in March as markets were disrupted by an escalation of tensions in Ukraine and worries over a slowdown in China, the world's second-largest economy.
Strategies focusing on distressed debt have performed best so far this year, the data showed, with returns hitting 2.8 percent.
North America has been the top performing region so far in 2014, posting gains of 2.3 percent, followed by Europe with 1.7 percent.
Japanese-focused hedge funds lost 1.9 percent on average in the first three months of 2014, making it the worst performing region. Stocks there were pegged back by concerns consumption would be crimped by Tokyo's sales tax hike to 8 percent from 5 percent at the start of April.
(Reporting by Joshua Franklin; Editing by Mark Potter)