NEW YORK (Bloomberg) — Hedge funds have been buying equities on speculation third-quarter profits will spur further gains after global shares rallied 68 percent since March, according to Credit Suisse Group AG.

The funds have "significantly increased" their positions in stocks, Andrew Garthwaite, Credit Suisse's London-based head of global equity strategy, wrote in a research report yesterday after meeting with clients in the US and Europe. Hedge funds are mostly private and unregulated pools of capital where managers can buy or sell any assets.

The bullish outlook from hedge funds contrasts with a "far more sceptical" view from so-called long-only managers who have been purchasing corporate bonds, Garthwaite wrote. Long-only funds may shift money into the equity market because valuations are becoming more attractive relative to debt, he wrote.

"Hedge funds seem to believe that the market is clearly going higher," Garthwaite wrote. Long-only investors "have been largely left behind", he wrote. "They have played the rally more via credit. Credit now offers less value than equities."

The MSCI All-Country World Index has jumped 68 percent from a six-year low on March 9, while the Merrill Lynch & Co. US Corporate Master Index of company debt has returned 22 percent. Alcoa Inc., the largest US aluminum producer, kicked off the third-quarter earnings season this week by posting a profit when most analysts had estimated a loss.

Consensus views among investors surveyed by Garthwaite were to bet on gains in developing-nation equities, technology stocks and commodities, the strategist wrote.