According to the Times Online, 170 hedge funds crashed during the credit crunch in the last three months.

The article said that "the number of hedge fund closures was 23 per cent higher than the same period last year, when 138 funds were shut in the wake of turbulence in financial markets."

The main casualties were single-manager hedge funds, which accounted for 155 closures. Flat performance at many funds has coincided with reduced appetite for risk among investors, poor flows of funds into the industry and general economic weakness.

One hedge fund manager said, "We quite like volatility. We like recessions and we like soup kitchens, because that's when we make our money," he said. "But too much volatility just makes people scared."