The hedge fund industry had outflows of $158.9bn (€126.1bn) last year, most of it lost in the fourth quarter, in its worst performance in 14 years, as managers struggle to restore investor confidence, according to a new report.

Outflows caused assets to decline to $1.29 trillion at the end of 2008 for the global hedge fund industry, compared with $1.59 trillion at the end of the third quarter, according to the Lipper TASS report.