Reuters – Millionaires who long put money with hedge funds are now skittish about adding fresh cash after these loosely regulated portfolios posted record losses last year, a top industry executive said on Thursday.

"We have probably seen the worst of the (hedge fund industry redemptions), but I think it will be a slow go to build up that asset base again," Don Heberle, executive director at Bank of New York Mellon Corp’s Wealth Management unit where he oversees the Family Office and Charitable Gift Services groups, said in an interview.

The potential of hedge funds to deliver strong returns in all markets because they can sell stocks short and use borrowed money has appealed to wealthy investors for years. With the help of people like Heberle’s clients — families that are worth more than $100 million — hedge fund industry assets doubled to $2 trillion between 2005 and 2008.

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