Hedge fund managers bruised by losses

By Friday morning in New York, the net stance for hedge funds, which captures the difference between the proportion of their holdings in long and short positions, was at about 40 per cent long. During bull markets it can go as high as 70 per cent and in the first quarter of 2009 it was as low as mid-teens.

"Flat for the year is the new up 10 per cent," said one industry veteran, who questioned how hedge funds would make money this year.

Hedge funds are also nervously waiting to hear from their investors as falling markets may prompt redemptions.

In 2008 many funds were forced to liquidate assets at a loss in order to meet cash calls.

But many funds had been hedged against volatility, even if they were not actively betting on a market fall. "I don't think anyone was really surprised by this," said one fund-of-funds manager. "I think the big guys were all prepared."

A few funds have even prospered. SAC Capital, the $14bn hedge fund run by Steve Cohen, was up 11 per cent for the year at the end of the month, after fees.