The biggest performance dispersion among hedge funds and funds of funds in six years has set the stage for what some predict will be a six-month-long bloodbath. Sources said they expect the body count to total as many as 2,000 hedge funds and 500 hedge funds of funds between now and the end of March as investors redeem assets from the poorest performers and weakest managers, and move into funds managed by strong, institutionally oriented firms.
Data from Hedge Fund Research Inc., Chicago, showed that for the 12-month period ended June 30, there was a 75 percentage point difference between the average performance of the industry’s top and bottom deciles.