Sept. 11 (Bloomberg) -- Australian hedge funds returned an average 3.2 percent in August, the sixth straight monthly advance, as equities managers continued to profit from the global stock market rally.

The Australian Fund Monitors Index, which tracks more than 200 hedge funds managed from within the country, added to its longest stretch of gains in almost two years, according to a report based on 31 percent of funds reporting.

“Once again, August results from some high conviction managers, particularly those who suffered during the GFC, were particularly pleasing with some returning over 10 percent for the month,” Chris Gosselin, chief executive officer of the Sydney- based industry researcher, wrote in a note on the result.

Australian hedge funds have climbed 13.3 percent this year, advancing along with global peers in the rebound from record declines in 2008. The Eurekahedge Hedge Fund Index, tracking more than 2,000 funds globally, returned 1.1 percent in August and has gained 13 percent this year, according to the Singapore-based data provider’s preliminary report this week.

Equity long funds, which wager on rising share prices, and equity 130/30 funds, which bet on falling as well as rising stocks, posted the best returns among Australia-based funds last month, with gains of 6.4 percent. The nation’s benchmark S&P/ASX 200 Index climbed 5.5 percent in August, it’s sixth straight monthly gain.

The Naos Small Companies Fund, managing $8 million, was the best performer for a second month among those that have filed results, returning 18.5 percent. Trojan Equity Ltd.’s A$51 million event driven fund returned 17.7 percent.

Real estate funds were the worst-performing strategy, losing 6.1 percent, according to the report.

Hedge funds are mostly private pools of capital whose managers participate substantially in the profits from their speculation on whether the price of assets will rise or fall.

To contact the reporter on this story: Malcolm Scott in Sydney at Mscott23@bloomberg.net

Last Updated: September 10, 2009 19:59 EDT