Hedge funds declined 0.48 percent overall in October, the first monthly loss after seven months of gains.
Despite the negative returns, hedge funds overall outperformed underlying equity markets, such as the MSCI AC World Index, which was down 1.38 percent last month, data provider Eurekahedge reported.
Performance across regional mandates during the month was mixed, with Latin American managers leading the table up 4.07 percent and Japan-focused funds gaining 2.28 percent.
Funds investing in Europe and North America, in contrast, declined 0.19 percent and 0.61 percent respectively.
On a year-to-date basis, hedge funds are up 2.85 percent and have surpassed their annual gains of 1.65 percent posted in 2015.
Global funds of hedge funds, however, are down 1.01 percent for the year, while long only absolute return strategies are up 8.07 percent. In comparison, the equity benchmark MSCI World AC (Local) Index gained 1.94 percent for the year.
Regionally, funds focusing on emerging market investment have fared best in 2016. Latin American, Eastern Europe and Russia and India mandated hedge funds are up 22.36 percent, 14.17 percent and 13.01 percent, respectively.
On a year-to-date basis, North American hedge fund managers are up 4.81 percent while their European and Japanese counterparts are in the red, losing 0.60 percent and 1.66 percent, Eurekahedge said.
Asset growth for the industry remains muted this year. Hedge fund assets overall expanded by only US$1.7 billion, a sharp drop from the US$102.5 billion growth seen in 2015.