Artradis Fund Management, once Singapore's biggest hedge fund firm, is closing its doors after two years of negative returns.
The volatility specialist plans to return cash to investors in both its AB2 and Barracuda funds by the end of next month. The firm currently has about US$800 million in assets under management, down from US$4.5 billion just two years ago. Most of that money now belongs to co-founders Stephen Diggle and Richard Magides.
Artradis said that the two funds being liquidated are already primarily in cash, although Barracuda investors still must approve a winding-up petition for the fund before it can be closed. Two other Artradis funds, which manage primarily partner capital, will move to Diggle's new venture.
Artradis enjoyed seven years of profits from its founding a decade ago. In particular, 2007 and 2008 "were spectacular," Diggle told Bloomberg News, with the firm earning nearly $3 billion for clients. But the last two years have taken their toll; Diggle would not provide numbers for last year, calling it "poor, but not disastrous." Bloomberg reports that AB2 was down about 29% through November and Barracuda 15%.
"That's become unacceptable to us and to our investors," Diggle said. "It was time to draw down the curtain."
Diggle said he planned to transform his family office into an asset manager. The new Vulpes Investment Management will take over Artradis' Russian Opportunities and Testudo funds, and will launch a long-only volatility fund similar to Barracuda. But the new firm, which is expected to debut in the spring, will not be as dependent on volatility as Artradis.
For his part, Magides plans to launch a family office of his own. Diggle said the two would continue to collaborate after going their separate ways.