The fund of hedge funds industry has seen its assets drop from a peak of more than $800bn (€550bn) last year to just over $400bn as its investment performance has fallen far behind its benchmark.

Record redemptions this year have driven the value of assets under management from $823bn in May last year to $440bn as of the end of last month, according to data provider Eurekahedge. In terms of asset flows, 2009 has been the worst year on record for funds of hedge funds, with net redemptions amounting to $164bn in the first 11 months of the year.