GLOBAL - Pension schemes fearing hedge fund fraud could be protected by an insurance product launched today by Protean Investment risks.
Nathan Sewell, managing director, Protean Investment Risks, told Global Pensions: "When assessing a fund for cover, we are focusing on fraud potential, not investment risk.
"This massive industry was, until now, largely unprotected against the misrepresentation of fund values which concerned investors more than theft of assets."
As it attracts more clients, Protean will develop a database of the funds covered by its policy, but Sewell pointed out the company would not investigate individual hedge funds.
Sewell explained how much the policy would cost a pension fund: "Based on the portfolio value, the insurance would cost in the low tens of basis points. If the pension fund was well diversified, this would of course be advantageous for their premium levels."
The product will be available to pension funds of any size based in any country, subject to licensing approval.
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