Investors have lost $10 billion from bad performance among Asia-focused hedge funds in the third quarter, prompting them to redeem an additional $3.4 billion from the industry, according to Hedge Fund Research, a Chicago-based consultancy.

This means the industry has shrunk by 13% in the past three months, from $100 billion to $87 billion, HFR calculates. This is worse than the global hedge-fund industry average, which has shrunk by 11% in the same period, to $1.72 trillion.

The biggest losses were in equity hedge strategies. The preponderance of these in the Asian market explains the reason why regional funds have fared worse than their global counterparts. HFR says investors withdrew $2.9 billion from equity hedge, plus another $366 million from event-driven funds and $196 million from relative-value strategies.

The worst performers have been in Asia ex-Japan, where the HFR index is down 33.7% year-to-end-October. Japanese strategies have done rather better, losing only 13% this year (which is less than a third of the decline in the Nikkei index).

It's a humbling story, particularly when compared to the year-on-year performance Asia-focused hedge funds achieved in August to October 2007, when they returned 8.7%. The industry hit a peak of asset size as well last autumn, exceeding $111 billion.

HFR's database covers 1,065 Asia-focused hedge funds, of which 26% are based in the United States and 24% in the United Kingdom. Another 15% are in Hong Kong, 11% in Singapore, and 9% in Australia. Fewer than 4% are based in Japan, nearly the same number as in China.

Of this universe, 73% of the funds pursue equity hedge strategies (and, in asset terms, 56% of them). Nearly 16% of the funds (and 27% of the assets) are in relative value. The rest are split between event-driven and macro strategies. About a quarter of funds (and assets) are dedicated to Japan.