Introduction

The Eurekahedge Hedge Fund Index shed 3.9%¹ in October, amid supremely choppy markets (the volatility index, VIX, breached a record-setting 90 points during the month), brought on by an environment of tightening credit conditions and heightening expectations of a global economic slowdown; the MSCI World Index and the Reuters CRB Index shed 19.1% and 18.3% respectively.

The sharply volatile and down-trending markets, coupled with redemption pressure from investors, continued to weigh heavily on hedge fund managers. As a result, the composite Eurekahedge Hedge Fund Index has had its worst two months in nearly a decade, in September (-5%) and October 2008. But these figures mask the phenomenal job that fund managers have been doing in terms of stemming losses and outperforming the markets, especially in an environment of deleveraging.