Activists helped fuel the strong month, with returns of 5.6 percent after some of the industry's biggest names reported brutal results from the first nine months. The HFR Equity Hedge Index also performed well, returning 3.2 percent for the month, while some fixed income strategies did well.
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In emerging markets, China strategies led the way with a 5.17 percent return while Latin America returned 4.41 percent.
"This dynamic performance recovery is both fluid and ongoing, as 3Q volatility and dislocations in many equity, credit and commodity exposures have created opportunities yet to be fully monetized," Kenneth J. Heinz, HFR president, said in a statement.
The news comes as several hedge fund heavyweights, including Bill Ackman at Pershing Square Capital and Larry Robbins at Glenview Capital, were suffering though miserable Octobers, with Robbins openly apologizing to investors for his performance.
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Compensation also has been on the decline thanks largely to declining bonuses because of weak performance.
Market volatility is supposed to be beneficial for hedge funds looking to capitalize on price inefficiencies, but a return to higher correlations and the collapse of energy prices has stunted the industry's returns. Heinz, though, expressed confidence that the group can bounce back.
"Despite a strong equity market recovery in October, macroeconomic and interest-rate uncertainty are likely to continue through year end, creating new performance opportunities and driving industry capital growth into 2016," he said.