Remember how alternative asset management was going to take over the world? Big investors poured money into hedge funds, private equity funds and property funds in search of returns that were not linked to share prices. They were prepared to pay high fees and for a while the returns appeared to justify them.

But, as it turned out, the returns were all too correlated with stock markets and it now all seems to be unravelling at amazing speed.

Hedge fund assets are expected to halve at least and some of the world’s biggest investors, including Calpers, the huge Californian pension fund, are slashing their exposure to property.

In part this reflects a rebalancing of investors’ portfolios, to reduce the alternative assets in line with falling share prices. But many investors appear to be doing much more than that.

Now the focus is shifting to private equity where there are concerns that the industry may be facing a fund crunch.

SVG, the listed arm of private equity giant Permira, is in talks to scale back payments it had promised to its parent as it finds its own finances squeezed.

SVG is facing its own funding difficulties because both debt and equity have been much harder to raise since the credit crunch hit. At the same time, it is likely to see the usual distributions from Permira dry up for a few years. This is because Permira will find it hard to sell portfolio companies and so return money to investors.

SVG is not the only private equity investor looking to scale back its commitments.

In some cases, investors had relied on profits from other investments to fund commitments to private equity firms and are now struggling to come up with the cash.

The bosses of Carlyle, the US private equity giant, highlighted this growing problem last month when they begged investors not to default on commitments.

With debt financing much more difficult to come by, the private equity firms need to maintain the flow of money from investors to keep the acquisition machine running.

Unlike hedge funds, which have to pay investors their money back on demand, private equity houses do not face the same pressures and theoretically can force investors to pay up committed sums.

But if investors simply don’t have the money, its difficult to see what the buyout kings can do about it.

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