A new service for hedge fund investors is taking some of the pain out of the essential but tedious due diligence manager selection process. ...

A new service for hedge fund investors is taking some of the pain out of the essential but tedious due diligence manager selection process. London and Bermuda-based Amber Partners are offering a service that reviews and certificates how a hedge fund manager works. The new service gives a seal of approval to a hedge fund's operational side but will not review a managers' investments or trading risk, nor will it give approval to its investment philosophy. Amber is backed by a consortium of private and institutional equity investors including Bear Stearns, BNP Paribas, Anchor Asset Management and Alexandra Fund Management. It has so far certified 11 hedge funds and plans to double this number by the early part of next year. The service could also have advantages for the hedge fund managers themselves. Many, especially emerging, managers complain that so much of their time is spent having to take every potential client through the same due diligence material. Instead, they can send out their Amber report. Hedge funds pay at least $40,000 and as much as $500,000 for the review which can lasts weeks and turns into a 10 to 15 page report with an executive summary.