One of last year's best-performing hedge funds has suffered so badly from falling securities prices that it has wiped out all of its gains since launch, as falling securities prices expose asset managers who were relying only on rising markets to make money.

Switzerland's 788 China fund has recorded a loss of 95% of its value for the first 10 months of the year. Over the same period, the Hang Seng index in Hong Kong fell 50% from the start of the year to the end of October.