Final performance for the Credit Suisse/Tremont Hedge Fund Index was down 6.3 per cent in October, according to Oliver Schupp, president of Credit Suisse Index.

Final performance for the Credit Suisse/Tremont Hedge Fund Index was down 6.3 per cent in October, according to Oliver Schupp, president of Credit Suisse Index.

Schupp says fund deleveraging continued to be a key theme in October, as volatility created a difficult trading environment for hedge funds.

'While spikes and contractions in the market can provide an opportunistic environment for managers that arbitrage mispricings in volatility, they can also create a very challenging trading environment,' he explains.

Negative performance was driven primarily by losses in the emerging markets and fixed income arbitrage sectors.

The dedicated short bias sector continued to do well, up over nine per cent for October and over 13 per cent year to date.

The index is constructed using the Credit Suisse/Tremont database of more than 5,000 hedge funds. 

It includes both open and closed funds located in the US and offshore, but does not include fund of funds.