Quelle Surprise! Hedge Funds Had a Horrible 2008, Lost 18%

"While you can blame the horrid results on the dreadful environment across a host of asset classes, a very real sense, the funds became victim of their own success. And I don't mean via the burgeoning amount of capital that reduced the returns in formerly attractive strategies.

No, what hurt hedge funds was their pursuit of institutional money. In the stone ages, when hedge funds were the province of wealthy individuals, they could do what ever they wanted to as long as it was legal and delivered outsized returns over time. In other words, they did not have to adhere to an investment style."