Investors pulled $32 billion from hedge funds in July, the largest monthly withdrawal since 2000, and experts believe withdrawals could even be higher in August, the Associated Press reports.

Nonetheless, according to a report from TrimTabs, as long as another financial crisis on the order of the subprime loan defaults does not happen, withdrawals should lessen in coming months.

In total, TrimTabs estimates that hedge funds have $1.9 trillion in assets. The subset of hedge funds that saw the biggest outflows, according to the company, were hedge funds-of-funds, which lost $55 billion, or 5%, of their total $1.2 trillion in assets. By comparison, such funds reaped $162 billion year-to-date through June.

Countering those outflows, regular hedge funds took in $23 billion in flows in July.

“We believe de-leveraging and risk reduction by funds of hedge funds was a major cause of the turbulence in the credit markets and the equity markets in July and August,” said Charles Biderman, TrimTabs CEO. “Assuming market volatility does not spike again this month, the worst of the selling in the hedge funds world is probably finished.”

In fact, Biderman said, redemptions of hedge funds-of-funds were probably responsible for the wiping out $2 trillion in U.S. stock market valuations and another $2 trillion overseas.

“In our opinion,” according to the TrimTabs report, “funds of hedge funds—even those that do not use leverage—make financial markets more volatile than they would be otherwise. “To justify their fees, funds of funds tend to trade their assets frequently. In addition, many funds of funds leverage their assets using bank debt. Add leverage to an industry in which countless imitators copy yesterday's unique investment style, and the law of unintended consequences rears its ugly head.”

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