Absolute Return – Assets for new hedge-fund launches fell "significantly" in the U.S. last year as hedge funds had their worst-ever year of performance, according to hedge-fund magazine Absolute Return.

"With these results, it’s no surprise that 2008 is being dubbed hedge funds’ worst year," deputy editor Carolyn Sargent said. "Turbulent markets, big losses, fund closures and the Madoff scandal have put investor loyalty to the test. Most investors are staying on the sideline, but those who are allocating capital can demand more favorable investment terms."

The financial crisis spurred investors to convert holdings to cash, and some funds faced unexpected disruptions to their trading strategies, including temporary bans on selling stock short.

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