The redemptions that I have seen could be at least 50 per cent for the average fund. You can discount two-thirds of assets for the funds of hedge funds that have performed poorly, and there are many of them. Everybody is running for cash now, even family offices are redeeming big time. There is no sticky money any more. The impact on the market will be very big. It’s not a trillion dollars that will disappear from the markets, it’s more, and people do not realise this. The market will have a very hard time for the rest of this year and even next year

—Geneva-based hedge fund consultant: FT 

HFs lose through redemption and erosion $210b from 2Q08 to 3Q08, exceeding total 2007 inflows. Some suggest that the industry will halve to $1t

  • 2007 Inflows — $194b
  • 3Q08 Withdrawals — Investors withdrew over $31 billion, the largest net redemption in the industry’s history, which offset all capital inflows into hedge funds in 1H08
  • 3Q08 Capital — total capital stood at $1.72 trillion at the end of the third quarter, down from $210mm from $1.93 trillion at the end of Q2

—Hedge Fund Research