Hedge fund assets fell an additional 10.6% in December to $1.84 trillion, down from a peak of $2.97 trillion in Q2 2008, according to HedgeFund.net.
The asset drop was largely due to net investor redemptions and fund liquidations of a record $221 billion during the month, according to the data provider. As a result, in Q4 2008, HFN estimates investor redemptions and fund liquidations reduced total hedge fund assets by $471 billion while negative performance resulted in an additional $185 billion loss.
For the full year, net investor redemptions and fund liquidations accounted for an outflow of $512 billion and performance losses accounted for an additional $535 billion loss; a total industry asset reduction of 36% or $1.047 trillion for the year.
“When one considers the magnitude of losses in global financial markets in 2008, it is not surprising that the hedge fund industry, which on an aggregate level likely began the year with a high level of leverage and long exposure, saw this amount of outflow and performance losses,” the firm said in a statement.