US private equity firm Carlyle Group is closing its hedge fund business after disappointing performances this year and losses in 2007, according to the Wall Street Journal.

Carlyle had a minority stake of about 40 per cent in Carlyle-Blue Wave Partners Management, a hedge fund group formed in April 2007 with an initial $900 million under management with a team from Deutsche Bank headed by Ralph Reynolds and Richard Goldsmith. It lost 17 per cent in 2007, but rose 2 per cent this year.

The company said: "The funds launched in a challenging market and have not been able to achieve the critical mass of assets under management necessary to support a fund infrastructure."