Assets invested in Asia-focused hedge-fund strategies fell about 10% in the first quarter of 2008, with industry assets under management plummeting from $110 billion to $100 billion, according to Chicago-based Hedge Fund Research.

Net allocations to Asia-only strategies also decreased in the first three months of the year, although net allocations to global emerging-market strategies, which include Asian markets, increased by $1 billion.

On a global basis, the hedge-fund industry attracted a net of $16.5 billion in the first quarter (versus receiving $194 billion throughout 2007), with total capital under management virtually flat over the quarter at $1.9 trillion. Assets in funds of hedge funds also remained nearly unchanged at just over $800 billion û the slightest increase in the industry since it experienced net redemptions in late 2005.

Asian strategies make up 14% of the number of hedge funds worldwide, but account for just 5.3% of capital. This reflects the relative youth of the industry, the fact that the regionÆs capital markets are still maturing, and the continuing dominance in the region of a single strategy û equity long/short.

Emerging market and Asia arbitrage strategies received the most inflows, while net outflows hit equity hedge strategies û in direct contrast to the flows experienced among strategies primarily investing in developed markets.

According to HFR, the weakest area of hedge-fund performance in the past quarter was in emerging Asia, with its Asia ex-Japan Index falling nearly 14%. This is the first such negative period for the asset class since it reached significant size, as the index had produced nearly 22% annualized performance since 2002.

Of the hedge funds included in HFRÆs universe, 24.6% are in the United States, 23.6% in the United Kingdom, 13.4% in Hong Kong and 12.5% in Singapore. Equity hedge strategies account for 77% of these funds, and 65% of Asia-focused capital, with relative value a distant second.

Japan-only funds account for 32% of the number of funds but only 27% of assets under management. Asia ex-Japan funds have a similar story: 45% of the number of funds but only 39% of the capital. Asia plus-Japan funds are the fewest, only 23% of the fund universe, but employ 35% of the assets.