Hedge fund Ospraie Management, one of the biggest players in commodities, said Tuesday it is shutting down its largest fund after significant losses.

The Ospraie Fund fell 27% in August alone due to bets on oil, natural gas, structured products and the fund has been selling off its holdings over the past three weeks, possibly contributing to the decline in commodity prices recently. The fund, whose assets peaked at $3.8 billion late last year, is the biggest run by Dwight Anderson, a veteran commodities investor.In a letter to sent to investors Tuesday, Mr. Anderson said: "The losses were primarily caused by a substantial sell-off in a number of our energy, mining and resource equity holdings during a six-week period characterized by some of the sharpest declines in these sectors in the past 10 to 20 years."

The fund was shut down, the letter said, because any loss greater than 30% triggered a provision that allowed investors in the fund to pull money out as they wished, resulting in Ospraie's decision to wind down the fund and return money to its clients, according to a letter
Losing bets on energy and resource stocks helped pare the fund from $2.8 billion in assets at the start of August, according to a person familiar with the fund. A spokesman for the New York-based Ospraie declined to comment. The Ospraie Fund started investing in February 2000 and returned about 15% a year, on average, until it hit trouble this year.