Hedge fund assets under management could fall to less than half of their peak high by this time next year, according to new research, as the poor performance of the sector and a flood of redemption requests combine to batter the industry.

According to research by Morgan Stanley, hedge fund's assets under management are likely to sink to $900bn (€706.8m) by the end of 2009. The figure had been $1.93 trillion in the first half of 2008.