By Patturaja Murugaboopathy

April 23 (Reuters) - Global equity market-neutral hedge

funds have lured investors as they can deliver better returns in

times of global rates uncertainty and geopolitical tension than

traditional stock markets.

WHY IS IT IMPORTANT

Equity market-neutral hedge funds (EMN) execute strategies

that capitalise on discrepancies in stock valuations by

purchasing undervalued securities and selling overvalued ones,

making them less exposed to fluctuations in broader market

indices.

Analysts say volatile market conditions are likely to result

in mispricing of stocks that these funds are well-equipped to

exploit.

They also say these funds could also offer a hedge against

market instability in the face of significant events, including

the U.S. Presidential elections, global interest rate policy

shifts, and concerns about an economic downturn.

WHAT THE NUMBERS SAY

According to HFR data, global equity market-neutral hedge

funds achieved a 4.1% gain in the first quarter of this year,

marking the highest quarterly increase in nearly 24 years.

The data also showed the funds attracted an inflow of $942.8

million in the first quarter of this year, compared with an

outflow of $95.9 million in the previous quarter.

QUOTES

"With a strong start to the year, I expect equity

market-neutral (EMN) hedge funds to continue their success

through Q2 and Q3 of this year, especially compared to the

market as a whole," said Jeff McClean, chief executive officer

at Solidarity Wealth.

"EMN funds provide diversification to investors with a low

correlation to the overall market. For institutional investors,

this can be incredibly important as they need to provide return

and/or income to their retirees or pension holders in good and

bad markets, " he said.