Hedge funds fret about investors

It has been a tough year for hedge funds. Returns are way down, and people are exceedingly nervous about the climate, financially and politically. So far, the public anger has been directed more toward the big Wall Street firms that cratered, sparing hedge funds, who are no stranger to public disdain. There is a lot to worry about right now. The New York Times notes that the average fund is down about 10 percent for the year. This could be one of the worst years ever. Closures have picked up, though this is largely a small fund trend. One danger sign: Credit raters are starting to downgrade collateralized fund obligations, which were created by funds of funds. These are basically hedge fund-backed securities, each including stakes in a diverse array of funds. If concerns over redemptions mount, they may get hit harder.

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