HFR reports that 778 hedge funds liquidated in the final quarter of last year, while the same period saw record investor withdrawals of over $150 billion.

The total number of liquidations in 2008 was 1,471, an increase of over 70 per cent from the previous full year record of 848 liquidations set in 2005.

The end of 2008 also saw a sharp drop in the number of new hedge funds launched, with just 56 launches for the fourth quarter, compared to 117 in the third.

Over the whole of 2008 659 funds were launched, which HFR notes is the lowest yearly total since 2000, when 328 funds were launched. On a net basis the total number of hedge funds declined by around 8 per cent to 9,284 in 2008.

In other figures, HFR reports that 2008 was a record year for performance dispersion in the hedge fund industry. According to the firm’s research, nearly 100 percentage points separated the top decile of performers from the bottom decile.

As well as widespread consolidation, the hedge fund industry will no doubt go through many more changes as it picks itself up from the mauling it experienced in 2008.

“As the industry evolves to suit investor demand, trends in strategy preferences, service providers, disclosure and transparency are likely to shape the industry landscape for the foreseeable future,” said Kenneth Heinz, president of Hedge Fund Research.