US-based hedge fund manager Tudor Investment is closing its $550 million small-cap fund after returns did not meet expectations. Manager James Pallotta wrote to investors in his Witches Rock fund: “We have been frustrated with the lack of viable ideas in the small-cap arena”. Tudor, which has $17.7 billion under management, will return money to investors in June 2007, including $25.3 million of performance fees accrued since the fund opened in December 2004. Witches Rock investors have the additional option of transferring to Raptor, another Tudor fund also managed by Mr Pallota.