In addition to the record-breaking losses which hit the hedge fund industry last year, many investors also became disgruntled when funds invoked “gating” clauses to stem redemption requests and locked clients’ money up at a time when most were running for the exits. The industry is now facing a difficult climate, with fewer clients around and more scepticism about the value and reliability of managed funds.

Aros Capital Partners sees a gap in the market for a service that aims to deal with investors’ doubts by explicitly focusing on investor protection. Christian Falster, a founding partner and chief executive of the company, told WealthBriefing that whereas in the past managers’ track records were the first thing discussed with clients, the structure of funds was now equally as important.

Mr Falster said the Aros Paradigm fund’s structure was designed following  investigations by his firm into the problems and issues facing the industry after the Madoff fraud case and the liquidity crisis.

According to Mr Falster, the crux of the fund’s structure is the mix of checks and balances between the fund, Citco Fund Services , and Bedrock RealTime . Another structural feature is that both the manager and fund are European-domiciled, he said.

The fund’s investment strategy is “based on a proprietary dynamic asset allocation model, aiming to create an investment with the highest risk-adjusted return”, according to a press statement from the company.

The investment team includes the four founding partners of Aros, Nicolai Borcher Hansen, Peter Brink Madsen, Jacob Krogh Madsen and Christian Falster; the first three of the founders were all formerly of Denmark-based Formuepleje, while Mr Falster was latterly with London-based FBR Capital Markets. Completing the investment team is external investor Henrik Lind, owner of Danske Commodities.

The minimum investment for the fund is €75,000 , with annual fees of 1.5 per cent and a 10 per cent performance fee. The redemption period is 30 days.