Northwater Capital Management Inc, said that two of its publicly traded funds contain an investment that was the victim of fraud.

Northwater Capital Management Inc, which manages money for institutional and retail investors, said on Tuesday that two of its publicly traded funds of hedge funds may contain an investment that was the victim of fraud.Northwater manages the Northwater Market-Neutral Trust (NMN_u.TO: Quote, Profile, Research, Stock Buzz) and the Northwater Five-Year Market-Neutral Trust (NYF_u.TO: Quote, Profile, Research, Stock Buzz), which it says are well diversified funds of market-neutral hedge funds.
The company did not provide details of the alleged fraud, nor name the affected hedge fund. Northwater representatives did not return phone calls on Tuesday.
Northwater said that if the fraud allegations are true, it would have a material negative impact on the net asset value of the two trusts.