Through 2008, hedge funds were weathering the storm better than mutual funds, but in February hedge funds began to lose some support from pensions and institutional investments. Hedge funds may now be taking a back seat to traditional investments. What's more, redemptions soared in February--even at 5-star funds. It is very unusual for strong funds to see extreme cash outflows, but these are unusual times.

As a result of the volatile hedge fund market, managers are suffering. The traditional "two and 20" fee structure works well during boom times, but since some funds have gone bust, many managers have just given up. Some are leaving altogether, while others are opening new funds; either way, investors are liquidated or ignored.

And with all this doom and gloom there are even more uncertainties on the horizon in the form of regulation. Despite the plethora of hedge funds that call Connecticut home, Greenwich's politicians have proposed several measures to rein in hedge funds through registration. It looks like there will be more where that came from--possibly on the federal level.