NEW YORK (Reuters) – Hedge funds posted a 1.65% gain in July, driven by a stock market rally which helped reduce their losses for the year to date, data provider HFR said on Friday.

“Led by high beta strategies, hedge funds posted the strongest gains in 15 months, as powerful risk-on sentiment drove a sharp reversal in equity markets, while the U.S. economy entered a recession and the US Federal Reserve raised interest rates again in an effort to slow generational inflation,” said Kenneth J. Heinz, President of HFR.

For the year to date, hedge funds remained down 4.1%, the fund weighted composite index showed.

Equity hedge funds posted gains of 2.89%, underperforming the , which went up 9.11% last month. For the year, equity hedge funds were down 9.2%.

Macro hedge funds, which trade a broad range of assets, such as bonds, currencies, rates, stocks and commodities, were down 1.07%, their third consecutive month of losses. In the year they remained the best-performing category, with gains of 7.36%.

Heinz said fund managers have positioned funds to preserve capital as well as to seize opportunities to take advantage of sudden shifts in macroeconomic conditions.