Drake Management has pulled the plug on its $2.5bn flagship hedge fund after failing to secure enough support from investors to keep operating the formerly high-flying New York-based fund – one of the best performers of 2006.

Drake, which manages about $11bn including long-only money, told investors in a letter on Wednesday night that it had decided to wind down the fund over the next year, but would launch a follow-on fund for those who wanted to stay with the firm.