E funds had their best performance in a decade and their greatest rebound since records began, according to new figures.
The rate of recovery outpaced many analyst expectations. An astonishing 83 per cent of all funds posted positive performance in 2009, recouping 77 per cent of the value they lost from the previous peak in 2008.
Of these, 28 per cent regained all losses experienced in 2008 and are now level with or above previous peak performance levels.
Hedge funds suffered their most significant drawdown on record when performance dropped 19.5 per cent in the second half of 2008.
Approximately $174bn (£107.5bn) assets were then considered impaired. Around $102bn of these have now returned to standard liquidity and $72bn remain illiquid.
The industry experienced net inflows of $12bn in the fourth quarter but lost a total of $74bn due to investors cashing in their funds at the height of the crisis.
However, the percentage of closed funds has dropped from 17 per cent to 13 per cent since November 2007.
The total value of industry assets is now $1.5 trillion.