HONG KONG (Reuters) -Asian equity-focused hedge funds have risen in May, erasing April's tariff-driven losses and returning to year-to-date highs on the back of broad market gains.

Asia-focused fundamental long-short hedge funds have posted a gain of 1.6% so far this month, bringing year-to-date performance back to the first-quarter high of 6.1%, according to a Goldman Sachs note citing data as of May 22.

A strong stock market rebound, fueled by the U.S.-China agreement to temporarily slash tariffs, helped regional managers recover from early April losses, the bank said.

By country, China-focused fundamental managers have returned 1.3% in May, while Japan-focused peers are up 0.8%, Goldman Sachs estimated.

However, the gains lag major benchmarks, as many funds had aggressively cut positions amid extreme volatility in early April.

The MSCI Asia-Pacific Index has advanced more than 4% this month.

"The V-shaped recovery was hard to trade for some," said Patrick Ghali, managing partner of hedge fund advisory firm Sussex Partners.

Depending on positioning, Asian hedge funds' performance has diverged since April and "we will see a lot more dispersion of returns", he added.

Goldman Sachs noted dispersion is particularly high in hedge funds trading Japanese shares.

Despite ongoing tariff and geopolitical uncertainties, most hedge funds appear more willing to take on risk.

Net exposure among Asian equity hedge funds jumped to 50.8% as of May 22, up from 46% at the end of April, Goldman Sachs says.