Amber Partners, a Bermuda company that provides operational hedge fund due diligence, has launched a new programme to help investors assess whether a fund has sufficient controls.

Under the programme, Amber does a 100-hour independent due diligence audit of a fund?s operational system and controls, but excludes investment systems. The exercise results in a ?full-scale? report on the individual fund, according to company management who walked through the new programme with .

Funds which, under the Amber assessment, meet a benchmark of operational quality are awarded Amber Certified status.

Certified hedge funds can then allow their prospective investors to view their Amber certification, which includes a detailed report assessing what controls are in place, the make-up of the board and management, among others.

The service could be a boon for investors with some burned in high-profile hedge fund collapses in recent years. Take the case of Bayou, a fund that collapsed earlier this year, leaving investors out by about $450 million.

The founders have pleaded guilty to criminal fraud charges, but not until after the fund collapsed. A closer look at Bayou?s operational risks may have saved some investors.

Investor due diligence is especially important now that the $1 trillion hedge fund industry is increasingly drawing investments from pension funds, endowments and charities.

Hedge funds, lucrative investment pools that generally make better-than-market returns until recently only attracted investments from wealthy, ?sophisticated? investors, or who understood the risk for return approach.

Reiko Nahum, Amber chief executive officer said: ?Industry growth and increasing involvement by institutional investors has created an unprecedented focus on operational risk.?

Amber principal Christopher Addy said investors can also be heartened that Amber?s work doesn?t end with the initial assessment: It is an ongoing monitoring process through the year.

Jamie Donnelly, who is based in Bermuda and Amber?s managing director, said to have the Amber certification also allows hedge fund managers to focus on ?what they do best?, creating a return for investors.

Ms Donnelly and Mr. Addy said the Amber assessment provides investors with the bulk of information they need to know about a fund.

While some individual due diligence may have to be done, it will be minimal, saving both the fund and the investor time and money.

Eleven funds have been Amber Certified to date, including funds managed by Bear Stearns Asset Management, CooperNeff Advisors, and Vega Asset Management, with more than $10 billion of assets between them.

Robert Slutz, chairman of the Vega Funds, said: ?We have seen the emphasis on operational risk increase dramatically and expect investors to become more demanding, searching out funds which have high quality controls in areas such as valuation and independent oversight.?

Amber is backed by a consortium of private and institutional equity investors including Bear Stearns, BNP Paribas, Anchor Asset Management and Alexandra Fund Management, a wholly owned subsidiary of Temasek Holdings, Singapore.

Amber?s industry reach also includes a user network of fund of funds, private banks, family offices and institutions who collectively have exposure to hedge funds in excess of $50 billion.

Each member of the user network agrees to use Amber Certifications when making investment decisions, and to encourage managers with whom they have invested to submit their funds for certification.

In addition to hedge fund managers and investors, the Amber certification could prove valuable to a wider audience, including insurers, who may be selling policies to hedge funds.