The fund also lost 6.3 percent in 2012; gained 0.3 percent in 2011; and declined 10.2 percent in 2010 and 11.1 percent in 2009. Each year, its short bets lost money.
The exact timing of the liquidation was unclear. Firm co-founders Marc Andersen and Eliav Assouline declined to comment.
"These are terrific guys and I wish them the very best in the future," Robertson said in a statement to CNBC.com
Axial isn't the only short-biased fund having trouble this year. The average short-biased fund is down 14.46 percent this year, according to institutional investment data provider eVestment. The funds also lost 13.17 percent in 2012 and gained 1.21 percent in 2011. They gained an average of 31.97 percent in 2008.
"The equity market rally, driven in part by multiple expansion, over the last few years has been a very difficult environment for funds operating with a dedicated short bias," said Peter Laurelli, eVestment's head of research. "Investors often include these products in portfolios as part of a hedging strategy, but monthly flows for these products throughout 2012 and early 2013 showed a decline in interest for that exposure."
Axial's fortunes were once bright.
The firm was founded in late 2002 by former Bear Stearns investment bankers Andersen and Assouline and launched in 2003 with $50 million, including money from Robertson (the exact amount of the seed was unclear).
That made Axial part of a vaunted group of dozens of other hedge funds given start-up capital from Tiger in exchange for a percentage of their investor fee revenue, including Chase Coleman's Tiger Global and Bill Hwang's Tiger Asia. Like many other Tiger affiliates, Axial worked out of the larger firm's headquarters at 101 Park Ave. in Manhattan.
The firm made money every year from 2003 to 2008, when Axial's flagship fund gained an impressive 17.3 percent, beating most hedge funds slammed by the financial crisis.
Institutional Investor named Andersen and Assouline to its list of Hedge Fund Rising Stars in 2010, noting that they are "considered to be among the best of the current residents at 101 Park Avenue."
The firm managed as much as $1.8 billion in November 2010, according to Alpha Magazine. But losses started in 2009 and assets declined. Axial managed $894.6 million at year-end 2012 and $605 million as of Sept. 30.
The firm launched two funds earlier this year to attract more capital.
One, the Axial Capital Gravity fund, was designed specifically to gain big if the stock market declined significantly, according to Hedge Fund Alert. The second was the Axial Capital Neutral fund, which sought a middle ground in its long and short bets. The two funds managed $53 million combined as of Sept. 30.
The flagship fund gained a cumulative 82.9 percent net of fees from inception in November 2002 to September 2013.
Ironically, short-biased fund may be making a comeback.
"What is of interest however is that in the last two months, August and September, there has been a slight increase of investor interest which could be seen by some as a lack of confidence in the levels of current market rally," Laurelli said.