Reading the papers, it's tempting to conclude that hedge funds are high-risk endeavors that are prone to spectacular flameouts. But AllAboutAlpha.com notes some recent research that suggests media-worthy blow ups are not the most common way hedge funds go out of business. Jung-Min Kim (no relation) of Ohio State University "studied hundreds of now-defunct hedge funds and found that most of them closed their doors after a relentless period of poor performance and bleeding assets, not as the result of a sudden violent drawdown as is often assumed."

So slow, tortuous deaths seem to be the norm. The death cycle seems to follow a rough pattern, shaky funds are forced to change their strategy to enhance liquidity in anticipation of redemptions. Investors get more nervous and eventually act.

For more:
- here's the article

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