Private equity firm Carlyle Group has split with the founders of its Vermillion commodity hedge fund firm after its flagship fund shrank from $2 billion to less than $50 million in assets, according to people familiar with the matter.

Vermillion Asset Management's Viridian commodity fund, which traded in oil, metals and agricultural markets, has seen assets dwindle after heavy losses and a wave of investor redemptions, the people said. The fund lost 23% in 2014; the latest investor exits began in the spring and the fund reached a nadir in recent weeks.