Word Monday that Brevan Howard Asset Management was closing its emerging-markets fund hit a nerve with other fund managers focusing on developing economies, many of whom have had a tough start to the year.
Brevan, the Geneva-based hedge fund company with roughly $40 billion under management, opted in recent days to close its Emerging Markets Strategies Fund, which sustained losses of 15 percent last year, according to hedge fund reports and people familiar with the matter. Its manager, a hedge fund veteran named Geraldine Sandstrom, is leaving the company.
Other hedge fund managers and the banks who serve them said that Brevan's setbacks underscored a tough period in emerging markets, a corner of the global trading arena that is known for volatility. Emerging markets were the worst-performing niche in the broader hedge fund industry in January, according to HFR, which reported that the group experienced an average downturn of 2.6 percent that month, vs. flat performance for funds in general.
(Read more: Short-sellerscouldn't even get market drop right)
"The emerging-market selloff has hurt more investors than originally thought," said one bank executive who works closely with hedge and sovereign-wealth funds.
Weakness in currencies like the Turkish lira and the Argentine peso—prompting government action in both those economies—touched off a momentary panic early this month, as traders worried about the possible domino effect of crisis in the foreign-exchange world.
(Read more: Yellen just added pressure on emerging markets)
For Brevan, the emerging-market fund losses in 2013 stood out even in a year of patchy performances for emerging market funds, and were amplified by further losses of about 1.5 percent in January, people familiar with the performance said. The fund managed about $2.4 billion at year's end.
Sandstrom, who worked at the macro hedge fund Moore Capital Management before joining Brevan in 2007, declined to comment on the details of her departure. But, say people familiar with her performance, she had managed to turn around double-digit losses before.
—By CNBC's Kate Kelly. Follow him on Twitter @KateKellyCNBC.