CITIGROUP Inc is closing a US$400-million convertible arbitrage fund, the final step in winding down its US$2-billion Tribeca Global Investments group, industry sources said yesterday.

Tribeca Convertible LP has been hurt by investor redemptions, the sources told Bloomberg News.

The fund's managers, Andrew Wang and Jeffry Chmielewski, are likely to leave New York-based Citigroup.

The closure of Tribeca Global, set up in 2004 with a goal of attracting as much as US$20 billion, comes as Citigroup struggles with its alternative-asset management unit. The bank most recently shuttered Old Lane Partners, the hedge fund Chief Executive Officer Vikram Pandit co-founded and sold to the bank last year. Citigroup in March started closing its Falcon Strategies hedge funds after suspending redemptions.

The primary strategy of Tribeca Convertible was investing in United States and overseas stocks and "equity-related securities" using "convertible securities arbitrage," according to a regulatory filing in April by MetLife Inc, which had holdings in the fund as recently as 2006. Convertible arbitrage funds typically buy bonds while betting that the same issuer's common stock will drop. Citigroup, the biggest US bank by assets, said in September it was closing Tribeca Global Investments and returning money to clients. About US$400 million in convertible and Asian securities would remain invested within Citigroup Alternatives, the bank said at the time.

Tribeca Convertible was down less than 5 percent this year, industry sources said. That compares with a 6.7-percent decline in the Fixed Income-Convertible Arbitrage Index, according to Hedge Fund Research Inc. The fund rose 20 percent in 2006 and 5 percent in 2007.

Jon Diat, a Citigroup spokesman, declined to comment or make Wang and Chmielewski available. "We just don't comment on specific investments we might be making," MetLife spokesman Christopher Breslin said.