A year ago, the hedge fund industry was full of optimism.

After years of performance trailing the stock market, fund managers saw the end of central banks’ quantitative easing – and, by extension, an end to what many perceived as artificial asset valuations pumped up by government intervention – as the chance to return to the glory days of colossal market-moving bets and double-digit returns. With interest rates and volatility on the rise, it would soon be time to crow about record-setting profits.