The average hedge fund hung on to its money in March while major stock indices declined, as the investment pools returned 0.28%, bringing the average year-to-date return to twice that of the benchmark S&P 500 index. According to the Credit Suisse First Boston/Tremont Hedge Fund Index, emerging-markets funds had the best average return last month, capitalizing on unstable conditions in the Middle East and Asia to notch an average gain of 1.83%. Arbitrage funds held steady, and global macro funds caught some of the updraft from emerging markets and currency fluctuations to return an average of 0.97% for the month. Oliver Schupp, the group's president, said that volatile conditions in both equity and bond markets, combined with widening credit spreads, were responsible for the sharp drop in the average return from February's 1.4% gain. Nevertheless, the average hedge fund in the index has a year-to-date gain of 3.42%. In contrast, the S&P 500 dropped 1.51% in March and now shows a year to date total return of 1.67%. The Dow Jones Industrial Avearge dropped a full 2% in March and now shows a total loss of 0.43% since Jan. 1. The CSFB index tracks 410 major hedge funds from a database of about 3,000 that report to TASS, a unit of Tremont Capital Management. Despite the lag in equity markets, short-bias hedge funds weren't able to capitalize on the series of drops that hit U.S. equities over the last month, and recorded an average loss of 2.56%. Long-short equity funds -- the largest component of the index as well as the most basic and commonly used hedge fund strategy -- showed an average gain of 0.2% to reach an average year-to-date return of 3.99%.