Goldman Sachs Group Inc. (GS) said on Thursday it was "business as usual" at its flagship hedge fund Global Alpha, amid speculation the investment bank was liquidating large parts of its portfolio.

The fund, which fell by 6 percent last year, has been the subject of persistent market speculation for several days. Goldman on Wednesday denied market talk that it was liquidating the fund and declined further comment on the matter.

As of a few days ago, the fund had $9 billion in assets under management, according to a person familiar with the situation. The fund, run by Goldman Sachs Asset Management, is down about 16 percent this year after a 12 percent drop in the past two weeks, the source said.

Several traders in Europe on Tuesday said Global Alpha had been selling positions, including German car parts supplier Continental, aerospace company EADS and Italian carmaker Fiat. Goldman on Tuesday denied the rumors that it was liquidating the fund.

Global Alpha has long been a top performer, fueling growth in Goldman's money-management business and helping make the bank the world's largest manager of hedge funds with nearly $30 billion under direction. Over the years, the fund has also fattened the wallets of Goldman insiders who invest in it.

Run by 40-year-olds Mark Carhart and Raymond Iwanowski, Global Alpha uses computer-driven "quantitative" models to make bold bets on stocks, bonds, currencies and commodities worldwide. The fund has had up and down swings but has delivered positive returns since its inception in 1995.

For example, the fund returned nearly 40 percent in 2005.

The recent weak performance at Alpha has put a dent in Goldman's otherwise stellar results in recent quarters. In the first quarter, Goldman's incentive fees from asset management fell 78 percent from a year earlier, to $23 million, a decline largely driven by Alpha's weak performance.

In the second quarter, Goldman said incentive fees fell again, by 87 percent.

Outside investors, meanwhile, are pulling out. Goldman's net inflows of money into alternative investments were nil in the second quarter, compared with $6 billion received in the year-earlier period.

The recent turmoil in credit markets worldwide has played havoc with a number of investors, including hedge funds that made extensive bets on mortgages and related securities.

Earlier Thursday, French bank BNP Paribas froze 1.6 billion euros ($2.21 billion) worth of funds, citing problems over U.S. subprime mortgages.