James Pallotta, a former partner of the US hedge fund pioneer Paul Tudor Jones, has liquidated his $800 million Raptor Global fund following 2009 losses and investor withdrawals, he said in a letter sent to investors yesterday, according to media reports.

Mr Pallotta did not specify a reason for closing the fund, reports said, but wrote that he had grown sceptical of the “sustainability of certain aspects of the industry’s structure and short-term focus.”

Many hedge funds have closed or suffered heavy redemptions as the huge falls in stock markets hit investments. In 2008, the industry, on average, suffered its worst-ever performance, falling on average by about 19 per cent, although funds have since recovered somewhat so far this year, recent data shows.

At its peak in mid-2007, Raptor managed nearly $9 billion in assets, but that declined to about $5 billion last August. Like other hedge funds, Raptor took huge losses in the fourth quarter and had a wave of withdrawal requests.