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Steve Chiotakis: There's an emergency summit planned for Washington this weekend. Twenty world leaders will gather to find common ground on tackling the global financial crisis. A lot of things to talk about there, including a plan to impose much tougher regulations on hedge funds. From London, Stephen Beard reports on the investment vehicle that is taking a lot of heat.

Stephen Beard: Now this is not for the nervous investor, but here's a glimpse into the mind of a hedge fund manager:

Hugh Hendry: I do feel I'm a kind of modern Joan of Arc, that I hear voices, I get these visions of the future. Which lead me to take investment decisions with other peoples money. And then I become paranoid that I'm wrong!

Fortunately for his clients, he hasn't been wrong lately. Hugh Hendry forecast the credit crunch. He's been making some big returns.

But many of his peers have not. Between them, hedge funds recorded staggering losses of $180 billion in the last quarter.

Hendry: And the next quarter, they'll be worse again. And the next quarter, they'll be worse again.

In fact, it's widely forecast that up to 30 percent of hedge funds -- that's more than 2,000 -- will evaporate in the year ahead.

Ian Morley runs a company that invests in hedge funds. He says many of them deserve to disappear.

Ian Morley: Many of them were unsuitable. They're not good managers. They're undercapitalized. They'll go to the wall. That's quite Darwinian. I'm not going to shed a tear for them.

But he is concerned about the looming threat of extra regulation. He claims that hedge funds have been unfairly blamed for the market turmoil. And now, he says, they're going to be punished -- wrongly:

Morley: Governments need scapegoats. They will put pressure on regulators. Regulators will come hit the hedge funds.

There could be tighter controls over borrowing and remuneration, new rules making the funds more transparent. Banks could be prevented from owning hedge funds. But, says Hugh Hendry, you won't get the hedge funds to avoid taking risk -- and a lot of it.

Hendry: Anyone who says they can make money for you and not do that is a promoter of castles in the sky.

And he says if his clients are prepared to back his visions of the future and the voices in his head, then that is up to them.

Hendry: I may blow up tomorrow. I may lose all of my clients' money tomorrow. Some very rich people will be just slightly less rich.

In London, this is Stephen Beard for Marketplace.