Asian hedge funds were down 5.3% for October, during a turbulent month in which the MSCI World index was down 19.1%. Hedge funds have been slashing gross and net exposures, which helps to account for their lower losses.

The Eurekahedge fund index was down 3.9% in October, and following on the heels of a September decline of 5%, it represents the worst month-on-month hedge fund performance in a decade.

In October, CTA/managed futures were up 6% according to Eurekahedge, bringing them up 16% for 2008 so far. While macro stayed flat, every other strategy slumped, with long/short, event driven and relative value all flirting with 5% declines. Arbitrage and multi-strategy were down 3.5%. At the rear were fixed income and distressed debt with 10% falls.

Eurekahedge recorded $68.1 billion in redemptions from hedge funds in October and just $5.4 billion in new inflows, illustrating how the capital raising tap has continued to run dry. Combined with the monthly losses, the world of hedge funds, measured in dollars, shrank by $110 billion to $1.65 billion in that one month.

Although the MSCI World Index was down 40% for the first 10 months of 2008, it is in their 10-month aggregate returns where the sense of unease about hedge fund performance really kicks in, as there has been a notable absence of months where the trend has been bucked.

Asian hedge funds are down 21% overall so far in 2008. Asia ex-Japan funds have lost 26% and Japanese strategies are down 14%. In splendid isolation at the back of the field is India. Indian hedge funds have declined by 53% so far in 2008, safely proving that although there were many people claiming that IndiaÆs growth story in 2006 and 2007 would be sustainable, they were wrong.