San Francisco-based Passport Capital made double digit gains this year because of its bet in Chinese Internet stocks, which had surged recently. Citing a fund investor, Reuters reported that Passport Capital was able to return 18.3% year to date when other hedge funds have only given modest returns. Last month, the hedge fund gained 2.4%.

Industry data has revealed that the average hedge fund has only gained an estimated 6% this year. This compared with the 25% gain posted by the benchmark Standard & Poor's 500 index. According to the report, the dull returns posted by hedge funds together with their high fees have made wealthy investors ask if these investment pools are indeed effective.

However, Passport Capital has continued to look for overseas investments. Stock picks from China and Saudi Arabia are now part of its flagship Global Strategy fund. Passport became popular for the 219% gain it posted in 2007, just before the onset of the financial crisis.

One of the largest holdings of Passport is Soufun, a China-based real estate internet portal. This year, Soufun posted a 196% gain. It received a boost when it unveiled plans this week that it would be introducing a financial services platform sometime this month. Another holding, Qihoo 360 Technology, saw its shares increased 190% this year. Qihoo 360 Technology is an anti-virus software firm. Etihad Etisalat, a Saudi Arabia-based telecommunications firm, also posted gains as well.

The investor also told Reuters that the fund's short positions in mining stocks were also beneficial for the fund for Passport Capital. Passport founder John Burbank has been hedging against a fall in gold prices in 2013, the report added. Managers had used gold as a hedge against inflation and a safe-haven investment. However, as prices of gold plunged, a lot of money managers have suffered losses. Reuters said that SPDR Gold Trust exchange-traded fund experienced a 26% drop this year.