Funds of hedge funds have begun to revise the way they are paying out redeeming investors, and are locking others in completely, in a bid to cope with the fallout from their own investments in portfolios exposed to alleged New York fraudster Bernard Madoff.

Directors of a number of products linked to the AllWeather fund, the flagship fund of hedge funds overseen by Pioneer Alternative Investments, have established separate portions of their vehicles to isolate their exposures to Bernard Madoff. The funds' directors have also frozen subscriptions to their portfolios, according to a filing with the Irish Stock Exchange.