Cheyne Capital, a hedge fund management firm running assets of $4.5bn (€3.4bn), has tightened its performance fee terms in the latest sign of hedge funds demanding top prices for top returns.

An investment consultant specialising in hedge funds said: "Investors do not like having to pay more but Cheyne will get away with it because it generates good investment returns. The best managers are able to charge more fees because investors are prepared to pay for outperformance."