Britain's Serious Fraud Office (SFO) yesterday launched a criminal investigation into a $550-million hedge fund, Dynamic Decisions Capital Management, following complaints from investors that some of its funds have lost large amounts of money.

The SFO issued a statement on its website that it has opened the criminal investigation following a formal referral by the Financial Services Authority and is seeking for information "that might help with enquiries" into Dynamic Decisions Capital Management hedge fund.

With its office in Chelsea, London, and listed in Cayman islands tax haven, Dynamic Decisions, was the launched in 2005 by 41-year-old Italian Alberto Micalizzi, a finance academician.

Dynamic Decisions is the investment manager of its main fund, the DD Growth Premium Master Fund, operated in the Cayman Islands and handled all its operations, which is said to now have assets worth just $20 million.

The Cayman Grand Court had put the fund into administration earlier this year after it failed to pay a large number of large redemption requests.

According to Micalizzi, the DD Growth Premium Master Fund, which was valued at about $550 million last December, invested in the US and European shares, but diverted a 55 per cent of the investment in the last quarter of 2008 to commodity -linked bonds, whose valuation was difficult to gauge and even harder to sell.