Goldman cuts hedge fund

GOLDMAN Sachs is to close its $1.6bn (£1bn) Global Alpha computer-based hedge fund after a poor trading performance and investor demands to pull out their money.

Goldman has written to the fund’s investors to tell them the fund, which makes money by quantitative trading, would be wound down by the end of October.

It has performed badly this year and is about 13 per cent down for the year, far more than the one per cent average fall across quant funds.

Global Alpha managed about $12bn at its peak in 2007 but has been in decline after suffering a horrendous performance in August 2007. The fund lost 22.5 per cent in a matter of weeks as market meltdown left quant funds reeling.

But it has failed to bounce back this year in contrast to its peers across the sector, which are proving better at handling fresh market turbulence.