stormThe latest update on funds of hedge funds (FoHFs) performance arrives from Fitch Ratings -- and it makes for an unsurprisingly sober read.

We perhaps know already that 2008 was the worst year ever for FoHFs, and that cumulative losses reached an all-time high as the year ended with a Madoff-shaped bang. Fitch also raises a fear that managers have shared after imposing redemption restrictions on clients wanting to stash their cash under the proverbial mattress:

The year has witnessed a wave of managers implementing restraints on clients’ access to their assets, thus putting again into question the business and sales model of the industry

More gloomy prose measures the impact from Bernard Madoff's alleged Ponzi scheme; itself not technically a hedge fund, of course, but those FoHFs that were caught out will force the wider industry to navel gaze its way to a new set of standards:

The whole chain of parties involved in HF management, administration and distribution need to rethink the monitoring of conflicts of interest, governance, independence of third-party service providers and ethics.