There’s no shortage of commentators lining up to opine on how much the troubled hedge fund industry is likely to shrink as the credit crisis unfolds.

So when someone talks about the industry being in “meltdown”, it is good to see they are backing up their dramatic views with some dramatic actions.

Enrique Marazuela, chief investment officer of Spain’s BBVA Patrimonios, says his clients have slashed exposure by more than two-thirds over the past year because the returns and risks are simply not what they were expecting.

On Monday Union Bancaire Privee (UBP) said it has taken down exposure to 20-25 percent from 30 percent at the end of last year.

Again, it says returns - running almost into double digits losses so far this year for the industry - have been disappointing.

Wealthy clients were the foundation on which much of the $2.6 trillion hedge fund industry’s early growth has been based.

UBP says the industry could shrink by one-third over the coming quarters as investors withdraw assets.

But if other wealthy clients are doing what BBVA is, then the shrinkage could be much more dramatic.