Hedge funds lost $5.1 in outflows in April

After six months of losing to the broader market, hedge funds finally beat the S&P 500's performance in April, slipping only 0.6% compared to the index's 0.8% decline. But that wasn't enough to lure in investors.

Hedge funds, which have an estimated $1.7 trillion in assets combined, saw investors sell off an estimated $5.1 billion worth in April, reversing two consecutive months of inflows, according to a monthly report from investment research firm TrimTabs.

So far this year, nearly $9 billion has been yanked out of the hedge fund industry, representing about 0.5% of total assets.

Meanwhile, bearishness over the S&P 500 (SPX) among hedge fund managers is at 6-month high, while bullishness cooled to an 8-month low, according to TrimTabs' survey conducted at the end of May.  But investors are optimistic about the prospects for the U.S. dollar. In fact, bullishness for the buck is at a 15-month high, according to the survey.

"Managers are responding to seemingly never-ending anxiety over eurozone sovereign debt, which is punishing the euro and bolstering demand for the greenback," said Leon Mirochnik, a financial analyst at TrimTabs.

Nearly a third of the 120 managers surveyed said they think the chance that the Federal Reserve will launch a third round of bond buying, known as quantitative easing or QE3, is higher than 60%.