Investors withdrew $399 billion from hedge funds, or about 20% of assets, in 2008, according to data from Hennessee Group. On top of an average 18.3% market decline, or $382 billion in investment losses, the total $781 billion hit that hedge funds took was severe.

At the start of the year, the hedge fund industry had an estimated $2 trillion in assets. That is now depleted to $1.2 trillion.

Charles Gradante, co-founder of Hennessee, told Dow Jones that the redemptions would probably have been worse, had not so many hedge funds frozen redemptions. That being the case, investors are likely to increase the number of lawsuits they bring against hedge funds this year.

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