For hedge funds, can 2008 repeat itself?

Hedge funds on average were down 18.5 percent for 2008 (as of November), and assets under management, which peaked at almost $2 trillion last June, shrank by almost one-fifth (as of October), according to Hedge Fund Research data. The Washington Post says assets under management could shrink by as much as 75 percent.

This is not earth-shattering news at all. You've heard it before. But the issue remains: How will the industry fare in 2009? A big bifurcation seems to be underway. The bottom 10 percent of funds lost more than 58 percent and the top 10 percent gained more than 40 percent, according to Hedge Fund Research. That's the largest spread ever in the industry. The two prerequisites for success going forward may be size and performance; lose one or the other and you're cooked.

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