It wasn't supposed to turn out this way.
GGT launched in 2011 with hopes to raise $2 billion and hire up to 25 teams with 150 total traders spread out between Purchase, Chicago, San Francisco, Geneva and Asia, according to Guggenheim statements at the time. Guggenheim then plowed more than $50 million into business operations, including iPad-based applications for risk monitoring and client reporting, according to marketing materials obtained by CNBC.com.
"We believe there are attractive opportunities to invest capital supporting trading strategies with high probabilities of success, particularly as banks are required to divest or significantly reduce their proprietary trading activities and smaller hedge funds find it uneconomical to continue," Katzovitz said at the launch.
Performance didn't match expectations.
The main fund, GGT Multi-Strategy, gained 3.19 percent in 2012 (from February to December) and 7.13 percent in 2013, according to marketing materials, but fell about 5 percent in 2014 through November, according to two people familiar with performance. Benchmark returns for similar hedge funds were higher each year: up 8.66 percent in 2012, 10.62 percent in 2013 and 5.06 percent in 2014, per the Absolute Return Multi-Strategy Index.
About 66 employees were hired as of late 2014, but with only 18 portfolio managers as of September, according to marketing materials. Virtually everyone was based in Purchase, with an outpost in Zug, Switzerland.
That employee total has likely fallen. The layoffs include seven portfolio managers for GGT, who invested across a range of strategies, including corporate events, stock volatility and emerging markets. They were: Steven Eick, Paul Horowitz, Michael Cohen, Gregor Dannacher, Francisco Drohojowski, Jamie Waters and Vinay Datta, according to people familiar with the situation.
The reasons for those cuts were unclear; performance varied for each team given different strategies. Most of the portfolio managers who were let go were surprised to hear the news, according to people familiar with the situation.
The fund's top marketer, Marjorie Kaufman, was also let go in December. She was hired in March 2014 after raising about $5 billion from clients as the head of marketing and investor relations at hedge fund firm Kingdon Capital from 2003 to 2010, according to her LinkedIn profile.
All those who left either declined to comment or did not respond to requests.
Read MoreThe best hedge funds for 2015 are...