Hedge funds are getting smoked by the commodities slump

The collapse in commodity prices has burnt another hedge fund.

Vermillion, a commodity hedge fund backed by Carlyle Group, has seen its flagship fund’s assets fall from nearly $US2 billion to less $US50 million, The Wall Street Journal is reporting.

What’s more is the fund’s cofounders Christopher Nygaard and Drew Gilbert have left the firm, according to the report.

The fund lost 23% in 2014, according to the report. David Rubenstein and William Conway, two of Carlyle’s co-founders, invested around $US30 million of their own money in the fund, according to The Wall Street Journal.

Carlyle did not return messages seeking comment in time for publication.

The fund is the latest specialist commodities trader to have been hit by an incredible plunge in commodity prices. The S&P GSCI commodity index, which is made up of the most liquid commodity futures, is down around 42% over the past 12 months.

On Monday, Bloomberg News reported that London-based Armajaro Asset Management will close its $US450 million commodities fund after it fell around 11 per cent in the first half of 2015.

Bloomberg also reported that Black River Asset Management is liquidating four hedge funds, including its commodities fund.

David Einhorn’s Greenlight Capital and Greenlight Capital Re, the fund’s reinsurer, have also been dragged down by the slump in gold prices.

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