Equity long-short hedge funds have seen nearly $150bn in client withdrawals over the past five years as investors have lost faith in their ability to capitalise on bull markets and protect cash during market downturns, according to a report by the Financial Times.

The report cites data from Nasdaq eVestment as showing that the strategy, one of the oldest and best known in the industry, has underperformed the US stock market in nine out of the past 10 years.

Designed to 'hedge' against overall market fluctuations through a combination of bets on both winning and losing stocks, past star stockpickers in the long-short space include some of the biggest names in the business including Tiger Management’s Julian Robertson, GLG’s Pierre Lagrange and Egerton’s John Armitage.

More recently though, big names including Chase Coleman at once-high flying Tiger Global and Lee Ainslie at Maverick Capital, have struggled while cheap index tracker funds have reaped huge gains from the bull market.

Despite a sharp rise in interest rates over the past two years long-short funds have continued to struggle gaining just 6.1 per cent on average last year, compared with the S&P 500’s 26.3 per cent gain.