Commerzbank is selling its $900 million fund of hedge funds manager,Comas, according to the Financial Times. The sale comes just months after it gave its main asset management unit to Allianz, the German the insurer, as part of a deal to take over Dresdner Bank.

The German bank is already in talks with several groups, including rival funds of hedge funds and wealthy families’ private investment offices, about a sale, two people familiar with the situation told the paper.

The Commerzbank unit is being put up for sale at a time when the fund of hedge funds industry faces questions about its future after poor performance, problems meeting withdrawals and the alleged fraud by US money manager Bernard Madoff, with whom many funds invested.

The Commerzbank unit was cash flow positive last year and is likely to be sold for tens of millions of euros, people close to the bank told the FT, although the bank is reserving the right to close it if no buyer is found. Commerzbank has about $300 million invested in the funds, other people familiar with the funds were quoted as saying.

Comas has not been accepting new money since last October, one investor was quoted as saying, when the bank began a strategic review of its future.

Comas has tried to distinguish itself from the bulk of funds of hedge funds, since relaunching three years ago, by using computer modelling to assist active management of its holdings. This helped last year, with its main fund down 13 per cent, against an average drop of 21 per cent measured by Chicago-based firm Hedge Fund Research.

The industry’s failure to provide the “absolute returns” investors expected has combined with the widespread move to cash to see record withdrawals.

Many funds of hedge funds are already being shut down, or heading that way, with Deutsche Bank closing its Topiary unit and Spain’s BBVA closing its Altitude fund. Banco Santander, the Spanish bank, and Swiss bank Reichmuth & Co are shutting Madoff-hit funds of hedge funds, and many smaller funds are expected to close after suspending withdrawals.

Max Gottschalk, UK chief executive of Swiss group Gottex Fund Management, told the Financial Times last week that he expected much of the industry to go out of business.

“Out of the top 50 funds of funds, a fair amount will not be around by the year end,” he said.

Even survivors are cutting back, amid widespread expectations that fees will be reduced, something already under way at several managers, including Gottex.