For the first time ever – probably – all the major hedge funds of the world are open to new money. But some are so short of cash that they may have to pay out distributions in kind rather than cash.

These are the views of Richard Elden, the godfather of the hedge funds of funds industry, recently born again as an activist fund-of-funds manager. Elden was speaking last month on a visit to Australia to support his recently appointed Australian representative, NWQ Capital Management.

The founder of the Grosvenor hedge fund of funds business, which is BT’s international hedge fund partner, said that most hedge fund contracts allowed them to pay out assets rather than cash to investors if necessary. He said that it was possible that this would occur due to the credit crisis and that some of those distributions might even be of illiquid assets. “At least, for the first time, all of them are open,” he said.