The hedge fund industry has been battered this year, suffering heavy losses in part due to redemptions by investors as they asked for their money back amid the market turmoil.
According to a Singapore-based hedge fund research firm Eurekahedge, the industry has lost some one-fifth of its assets this year to $1.55 trillion. About $125 billion of the losses came from redemptions.
The scandal surrounding Bernard Madoff is certainly not helping the industry. The investment adviser and former Nasdaq stock market chairman has allegedly swindled clients out of $50 billion through a bogus fund. It's forgivable if seasoned high-net worth investors get cold feet and steer clear of this form of investment.
Stephen Gollop, CEO of Tyche, expects one-third of the hedge funds to disappear in the first-quarter of next year.
"My figures are going down and down in terms of who is going to be left. Because we are seeing it just go out in every direction. There are funds out there now which are actually set up very, very well," said Gollop on CNBC Asia's "Protect Your Wealth" segment. "But they’re in danger because of redemptions. They just can’t control the amount of people who want to exit anything called hedge at the moment."