After weeks of various reports of individual hedge funds suffering amidst the financial downturn (and one furious fund shut-down from Andrew Lahde), Financial Week puts a finer point on it: hedge funds are screwed this year.
Financial Week: The hedge fund industry suffered a quarterly decline of assets of $210 billion during the third quarter—its largest quarterly decline ever—as the current financial crisis caused performance losses and record investor redemptions.
Hedge Fund Research said investors withdrew over $31 billion from hedge funds, the largest capital redemptions the industry has ever seen. In fact, those redemptions entirely offset the industry’s capital inflows for the first half of 2008, resulting in a net decline of $2.5 billion for the year.
“Since peaking last October, the industry has lost 11.5%,” said Hedge Fund Research president Kenneth Heinz. “With losses continuing through October, it appears that 2008 will be the worst year on record for both hedge fund performance and industry asset flows.”
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