(Bloomberg) — Hedge funds globally returned an average of 2.5 percent in November, the largest monthly increase since January, led by gains in emerging markets, Hedge Fund Research Inc. said in a report.Hedge funds returned 11.7 percent this year through last month, compared with a 14.2 percent increase including dividends by the Standard & Poor’s 500 Index, a broad measure of US equities, according to the report.

Hedge funds made up for earlier declines, including three straight monthly losses from May to July.

They gained more last month than the 1.9 percent increase of the S&P 500 including dividends.

Among top-performing funds, those investing in emerging markets gained an average of 4.6 percent in November, pushing them to a 20.4 percent year-to-date increase. The highest returns came from funds investing in Europe and Asia, as well as parts of Latin America, according to the report. The continued boom in buyouts helped funds that invest in mergers and acquisitions.

“What has been driving strong performance and is continuing into the beginning of December is that emerging markets have been strong, and the amount of liquidity you see in the market continues to drive asset prices,” Kenneth Heinz, president of the Chicago-based firm, said in an interview today. “Concerns about higher interest rates, commodity prices and higher inflation haven’t subsided, but they’re not as strong as they were a few months ago.” Taiwan, Brazil, Mexico and Japan are among the markets that have boosted hedge-fund returns, Heinz said. Additionally, corporate restructurings and stock offerings in China have paid off for some funds.

Those geographic forces helped improve the performance of macro funds, which wager on broad economic trends globally and have been some of the worst-performing portfolios this year, the research firm said. Macro funds had their largest monthly gains since November 2004, returning 2.8 percent in November compared with 1.1 percent in October.

Macro funds are now up 7.2 percent for the year, lagging behind all but a handful of strategies.

Globally 118 buyout firms have raised a record $170 billion this year through mid-October, up from $134 billion in 2005, according to London-based consulting firm Private Equity Intelligence Ltd. The abundance of cash has led to an increase in acquisitions, helping so-called event-driven hedge funds gain 13.5 percent on average this year through November, according to Hedge Fund Research.

Funds that sell securities short were the only group that posted a decline in returns last month. Successful short positions involve selling borrowed shares and buying them back after their value falls, pocketing the difference. Short-selling funds lost 1 percent on average in November and are down 3 percent this year, according to Hedge Fund Research.