It has been a terrible year for hedge funds, not only in terms of performance but more importantly when it comes to keeping LPs and investors happy and invested, and it is only getting worse.

Recall that in recent weeks some very prominent alternative money managers have been slammed with major substantial requests such as Brevan Howard which was served with an cash call for $1.4 billion, and Tudor which has seen $1 billion in redemptions, while New York City’s pension for civil employees voted this month to pull $1.5 billion from hedge funds.

Then, just three days ago, AIG joined the anti-hedge fund fray when it announced it would redeem $4 billion from its hedge fund investments, while Chris Ailman, who runs investments at the $187 billion California State Teachers’ Retirement System, or CALSTRS, said that the hedge fund industry’s two-and-twenty fee model is “broken” and “off the table” for large institutional investors.

Moments ago we the latest confirmation that the hedge fund business model is indeed suffering through an existential battle when MetLife Inc., the largest U.S. life insurer, said was seeking to exit most of its hedge-fund portfolio after a slump in the investments. According to Bloomberg, the insurer is seeking to redeem $1.2 billion of the $1.8 billion in holdings, a process that may take a couple of years to complete, Chief Investment OfficerSteven Goulart said Thursday in a conference call discussing first-quarter results at the New York-based company. The portfolio, which posted negative returns in the quarter, was cut by about $600 million in 2015, he said.

"It’s had up-and-down years and really it’s just too inconsistent, we think, in actual performance," Goulart said. “What we’ll be left with is a small portfolio of really our most consistently performing managers in hedge funds."

Oh, so past performance is indicative of future performance after all?

As Bloomberg adds, MetLife, which has an investment portfolio of more than $520 billion, has been looking in recent years for alternatives to bonds because interest rates are so low. While results from private equity have been satisfactory, hedge funds have been more volatile, Goulart said.

Chief Executive Officer Steve Kandarian added that he is seeking to increase the portion of earnings that can be returned to shareholders. That focus on free cash flow factored into the decision to cut the hedge-fund investments, Goulart said.

In other news, MetLife reported profit Wednesday that missed analysts’ estimates. Investment income fell 17% to $4.56 billion, hurt by both hedge funds and low bond yields. Kandarian said Thursday that the insurer will continue to hold some investments beyond bonds.

“Some earnings variability is an acceptable risk, as these asset classes have provided strong returns to MetLife shareholders over time,” Kandarian said. Variable investment income, which includes hedge funds and private equity, “was better than planned in 7 of the past 10 years.”

In other words, the surprising redemption is as much as an attempt to scapegoat hedge funds as it is a statement on the alternative asset management industry. But whatever the reason, the reality is that now that the process is in motion, we expect billions more in redemptions as the great "wash out" predicted by Dan Loeb takes place. It also means more forced sales and liquidations, which in the current illiquid market will only result in even more volatility and even more underperformance by those other hedge funds who have matched positions to those being unwound.

Finally, for those seeking the ultimate culprit why the hedge fund industry has been on such a poor roll in recent years, look no further than the Fed, which continues to intervene any and every time there is even a modest correction in the process crushing the short books and leading to unprecedented short squeezes such as the ones experienced in February and March of this year.