Large US investors are cashing in their hedge fund holdings as private equity managers force them to honor earlier promises to stump up more money. Such forced selling is expected to drain assets from the already depleted $1.6 trillion (€1.2 trillion) hedge fund industry through the first half of next year.

Investors and investment losses have drained about $106bn from hedge funds this year, the first time in 14 years more money has left the industry than come into it.