There are signs of life in the hedge-fund industry.
Hedge funds posted gains of 3.18 percent during the first quarter, which represented the best start to the year since 2013, according to the Preqin All-Strategies Hedge Fund benchmark.
The positive returns spanned a variety of strategies, geographies and size, and come at an important time for the industry, which has seen its investors defect in droves.
"The key to attracting investor capital back into the industry over the remaining three quarters in the year is likely to be maintaining these returns and dealing with concerns over fees," Amy Bensted, head of hedge fund products for Preqin, said in the report released Thursday. "But hedge fund managers will now be able to point to the strength of recent performance as an incentive for investors."
Despite hedge funds' positive gains for the quarter, they still trail the Standard & Poor's 500, which gained 5.5 percent over the same period.
Hedge funds also lagged the broader gauge over the course of the year. Despite posting just one month of losses, the Preqin All-Strategies Hedge Fund benchmark gained 11.6 percent, which was slightly less than the S&P 500's 14.5 percent gain in the year through March.
Event-driven and equity strategies were the bright spots within hedge funds, with returns of 4.2 percent and 4.1 percent, according to Preqin. Relative value showed the lowest returns, with gains during the quarter of just 1.1 percent.
The first-quarter results came during a time of anxiety in the hedge-fund industry. After years of underperformance, the industry is experiencing billions of dollars in outflows and pressure by investors to decrease fees.
Additionally, first-quarter letters obtained by several hedge-fund managers indicate a sense of caution about the markets.
Jeff Ubben's ValueAct said in an investor letter earlier this month that he plans to give back $1.25 billion to limited partners starting on May 1, largely due to what his firm described to be a lack of opportunities to invest.
Leon Cooperman of Omega Advisors said in a letter to his investors that he would not be surprised to see the S&P 500 at the same level in six months as it is today. He said it's time for the U.S. equity market to rest.