The lucrative fees charged by hedge funds will have to fall in the wake of the dire returns posted by the $2,000bn (£1,250bn) industry this year, according to the industry’s own trade body.

Alexander Ineichen, a member of the investor steering committee of the Alternative Investment Management Association, said he also feared that 80 per cent of hedge funds with less than $100m under management would fold as a result of the current woes, with 30-40 per cent of mid-sized funds disappearing, although the biggest names could benefit from industry consolidation.