The economic damage inflicted by Japan’s
devastating earthquake in March this year has hit Gaia Capital Management's Japan
focused hedge fund with huge losses, according to Reuters.

The fund, which was started by former Goldman Sachs trader
Kenichiro Nishi, has shed most of its roughly $150 million in assets following
redemptions triggered by a 44.34 per cent loss in March, the news service said,
citing a letter sent to investors that it has obtained.

GAIA J-Multi Strategy Fund assets fell to $32.65 million
through the end of April from $92.06 million at end-March. Rapid selling forced
the fund to close out its positions. In March, Japan's benchmark Nikkei share
index .N225 slumped 8.2 per cent during the month.

Following "the earthquake and the deterioration of the
situation at the nuclear power plant that led to radiation leaks, both the
index and volatility broke sharply out of their expected ranges on the 14th and
15th," Gaia Capital wrote to investors in March. "As a result, the
fund incurred heavy losses that were beyond our expectations and we had to
unwind all positions in the portfolio," the letter said, according to the
report.

The news service said it was unable to obtain further
comment from the fund, either by email or through contact with journalists.