A decade after Paulson shot to fame betting on the collapse of the U.S. housing market, the hedge-fund mogul is struggling to persuade investors to stick with him after a string of missteps on everything from gold to European bonds to drug stocks.

Since the end of 2015 alone, assets at Paulson & Co. have fallen by $6 billion from losses and client withdrawals.

The decline, underscored in the firm’s most recent regulatory filing, leaves Paulson and his employees with just $2 billion in client money. Most of the remaining $8 billion is Paulson’s own fortune.

His personal wealth aside, it’s a remarkable comedown for Paulson, one of the biggest names in the hedge-fund business. The idea that he might end up managing mostly his own fortune would have struck many as improbable 10years ago. At his firm’s peak, in 2011, he oversaw $38 billion -- half of which belonged to outside investors.

“As outside assets continue to erode, the running question for Paulson becomes more forceful: Why doesn’t he just convert to a family office?” said David Tawil, the founder of Maglan Capital LP, a New York based hedge fund that specializes in event-driven strategies. “But to get the firm back on the rails, I don’t think is impossible.” […]