Respected commodities hedge fund BlueGold has veered from its energy-focused strategy, betting half its money on equities and other trades that are worrying investors as it turns in its first down year.

The London-based fund, founded by former Vitol oil traders Dennis Crema and Pierre Andurand, is heading for a negative annual return, losing 34 percent through mid-December. Its asset base is down to $1.2 billion from $2 billion about a year ago.

The change in fortunes has raised concerns among some investors who question an increase in exposure to equities, as well as macro-hedges which investors say is unfamiliar territory for the fund that made its name in crude derivatives.

Macro-hedges are used to eliminate risk across a portfolio of assets, with a fund often taking offsetting positions for each of its assets.

Many funds specialize in such cross-market hedging, but the strategy has not paid off for BlueGold, say investors who have been with Crema and Andurand since they launched their fund in 2008, after leaving Vitol.

They are just not qualified to put on these kind of hedges. It's something that's worrying us. And from what we know, it's also worrying others who are invested with them, said an investor, speaking on conditions of anonymity because of the confidentiality of the information.

BlueGold's latest risk profile, made available to Reuters by the investor, shows the fund having a 15 percent exposure to macro-hedges and 35 percent to equities. Together, that accounts for half of the fund's risk, versus a 35 percent exposure to energy, and the balance for other commodities and currencies.

At the start of 2011, Bluegold's exposure to equities was as low as 5 percent and it had no macro hedges at that time, according to another contact who works with the investor source.

We've no idea what specific trades they've been doing on equities or the macro side. We don't know the pluses and negatives of those trades either. What we know is they've fallen deeper and deeper into the red and that's not comforting.

It was not immediately clear if the shift in focus was aimed at improving performance or part of a broader strategy to diversify away from oil.

BlueGold did not return phone calls and an e-mail from Reuters seeking comment.

This year's performance contrasts starkly with its debut in 2008 when the fund grabbed world attention with a 200 percent gain when most of the hedge fund universe was blowing up.

BlueGold and its almost pure play on crude derivatives were an enigma to many in the oil industry as it rode the market's ups and downs to best its peers year after year.

So heady was its influence at one time that when crude prices tanked 5 percent in a day in February last year, the London-based fund was blamed for dumping long positions that exacerbated the selloff. Crema denied the accusation.

This year has been tough on some of BlueGold's rivals too. Clive Capital, a $4 billion fund led by former Moore Capital star commodities trader Chris Levett, is down about 9 percent through November. Astenbeck, another true-blue $2 billion oil fund run by Phibro trader Andy Hall, is flat after surviving months of losses.

Oil prices saw more than their share of volatility in 2011, finishing the first quarter strongly on the back of Libya's crude export ban, then slumping on the European debt crisis and the dollar's strength before rebounding just two months ago on falling U.S. crude supplies.

Despite the swings, Chicago-based Hedge Fund Research reports that the average energy fund is up 0.46 percent through November.

One thing that's certainly true in the case of BlueGold is that they were scarred by their macro environment, said another long-time investor with Crema and Andurand.

I always worry when any manager changes their stripes or tries to add a new strategy or even just a twist. It doesn't mean they can't pull it off swimmingly, but more often than not, they don't.

(Reporting by Barani Krishnan, editing by Josephine Mason and Alden Bentley)

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