(Bloomberg) -- Michael Cowley’s Sandbar Asset Management has shut down its hedge fund as it struggled to grow its assets.

The investment firm returned capital in Sandbar Master Fund last month saying the money pool never reached critical mass since its launch in 2018. The equities market-neutral fund managed $84 million, down from a peak of $150 million, and the cost to run it impacted returns, according to Sandbar Chief Executive Officer James Orme-Smith.  

Once one of the fastest growing firms in London, Sandbar now solely focuses on running its Lumyna - Sandbar Global Equity Market Neutral UCITS Fund, a more liquid version of the fund that mimics the same investment strategy but allows investors daily access to their capital.  

“Sandbar continues to manage almost $400 million in its flagship UCITS fund and is fully committed to growing its business,” Orme-Smith told Bloomberg News.

Equity-focused hedge funds have found it difficult to raise money following years of mediocre returns and investor shift toward multistrategy investment giants in search of stable returns. Clients pulled almost $51 billion from equity hedge funds through November last year, according to data compiled by eVestment.

Cowley ran an equity long-short money pool for billionaire Izzy Englander’s hedge fund Millennium Management before setting up Sandbar. His previous employers include Citadel. 

Sandbar’s equity market-neutral strategy typically aims to avoid directional market exposure by matching bets on rising shares with wagers on those expected to fall. Its combined assets — including its hedge fund, UCITS strategy and managed accounts — once touched $2.5 billion. 

The decline in assets in 2023 followed two years of losses in both its hedge fund and UCITS strategy, according to investor letters seen by Bloomberg News. 

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