The Tate Gallery responded to 2008’s market turmoil by completely eliminating its exposure to hedge funds, having previously held 23 per cent of its allocation in this class.

The Gallery held £6.3m in hedge funds at 31 March 2008, but converted them into cash after they lost 13 per cent of their value, more than £800,000.

It sold its hedge fund investments for £5.2m, resulting in an overall loss of £1.1m over the course of the financial year.

At year ending 31 March 2009, the market value of the Gallery’s investments was £16.1m, down £10.5m on a starting figure of £26.6m.

The Tate’s hedge fund allocation was managed by TriAlpha Fund Managers, but has now terminated its relationship. Its other fund manager, Coutts, continues to manage a mixture of bonds and equities.

The charity’s chair, Paul Myners, resigned in October 2008 to become the government’s financial services secretary. He, along with fellow trustee Franck Petitgas, has a background in hedge funds.

The Gallery’s investment policy was put under review in the autumn of 2008, with an investment committee formed and a revised investment policy put in place last year.