With the hedge fund industry set to break through the $1 trillion (€750bn) barrier in assets under management in the coming year there are growing concerns that the rapid growth of the industry is hurting performance.

Hedge funds were widely perceived to have struggled last year, with market indices posting negative returns during the middle of the year. The poor performance coincided with record inflows into the sector from institutional investors, with a net $42bn entering the market in the second quarter, according to Tass, a data provider. Some observers concluded that the industry did not have the capacity to cope with such a flood of new money.