Falling base metals markets have renewed concerns that hedge funds making big bets on high prices may be in trouble after last year's missteps that put a few funds out of business and hurt the industry's image as a money machine. On Friday, copper and zinc took a hammering on market jitters over reports that a hedge fund specialising in metals had suffered losses. Prices for the two leading base metals slumped as stockpiles grew after sales slowed to China, a key market. Red Kite Management's US$1 billion metals-trading division, which saw strong gains last year, lost almost 20 per cent in the first days of last month, the Wall Street Journal reported. Red Kite declined to comment on the losses. However, it said it had sent investors a note seeking a longer notice period for those who wanted to withdraw their money. 'As you get bigger, your positions get bigger and it takes a longer notification period, it's as simple as that,' said Oskar Lewnowski, an official for the hedge fund. He denied suggestions the fund was in trouble and investors were rushing to get out. Copper prices have tumbled about 40 per cent since hitting a record US$8,800 a tonne in London and US$4 a pound in New York in May. Investment experts said Red Kite's reported assets of US$1 billion could allow it to take large positions in commodity markets, raising questions on what could happen to confidence in the hedge-fund industry if its losses deepened. The report said Red Kite posted more than 190 per cent gains for at least one of its hedge funds last year, betting on various metals. However, analysts said investors have grown wary of such numbers after the US$6 billion loss suffered last year by energy hedge fund Amaranth on bad bets on natural gas. Other fund mishaps last year include US$500 million MotherRock which also bet the wrong way on natural gas and US$250 million Ospraie Point Fund which misread the copper market. '[Red Kite's losses have] a definite psychological impact because of everybody's inate desire to know why [such] things are happening,' said Adam Sarhan, the head of markets advisory GlobalMacroResearch.com. Red Kite's trading position on metals was not known. However, the hedge fund has been bullish on base metals. 'We believe that fund diversification flows into commodities as an asset will continue to support pricing across the metals complex,' said David Lilley, a partner at Red Kite.