Ospraie Management, the US hedge fund firm run by commodities trader Dwight Anderson and part owned by Lehman Brothers, is to shut down its flagship fund and return money to investors.

The Fund suffered heavy losses in August. It lost 26.7 per cent in August and was down 38.6 per cent over the year to date. A letter to investors stated that the losses were primarily caused by a sell-off in the fundâ??s energy, mining and resource equity holdings.

Given the level of anticipated redemptions, in addition to outstanding redemption requests, the fundâ??s managers and board decided to suspend redemptions and conduct an orderly disposal of the fundâ??s remaining positions.

The letter said the balance of the fundâ??s assets, which will consist mostly of illiquid investments, will be returned as investments are sold off. The letter said it could take as long as three years to dispose of remaining portions of the portfolio.

Full text of letter