2008 has been an arguably rough year for hedge funds. Over 20%, or US$384 billion, has been shaved off the total value of hedge fund allocations globally, and industry assets have dipped below their December 2006 levels (US$1.54 trillion) for the first time in December 2008 (to US$1.5 trillion). Investment losses accounted for US$185 billion of the decline, while net asset outflows from fund liquidations and investor redemptions made up for the balance of US$198 billion. This is in stark contrast to 2007, when industry assets grew by US$168 billion on account of performance, and another US$175 billion from net inflows. In all, the industry saw positive asset growth from performance in only four of the last 12 months, and net asset inflows in five. Figure 1 below gives a monthly breakdown of industry flows and total assets.
