Singapore-based hedge fund, Artradis, well known for its multi-arbitrage Barracuda fund, is preparing a series of three new funds. In contrast with the relative value strategies of its existing fund, the new funds will be driven by a more fundamental research-based trading strategy. Steve Diggle, managing partner at Artradis expects the funds to launch in autumn this year.
While the three funds will have the same value-based intellectual underpinning, they will differ in their levels of market exposure with one being short-biased, the second long-biased and the third market neutral. The funds will invest in multiple asset classes including equities, equity derivatives and credit instruments over the Asia ex-Japan region and will offer monthly liquidity, allowing investors the opportunity to express their views on the Asian markets by trading between the three funds.
Diggle, explains that the structure of the new funds is a response to increasing investor demand for flexibility and transparency in their hedge fund investments. "Investors have had difficulties constructing portfolios of hedge funds in Asia because they don't have enough transparency as to how much market exposure they really have," he says.
He adds that from a portfolio allocation perspective, investors in Asia are still struggling to diversify their portfolio with uncorrelated strategies.
"We've seen demand for more product that can prove to be uncorrelated with other Asian hedge funds. While our short-biased Asian fund may not outperform in the context of Asia's long-term upward trend, it will fulfill an important function in a portfolio during downturns in the Asian markets."
Diggle explains that the new fund series seeks to marry first-rate fundamental research on companies, with the ability to apply the results to the most suitable asset class.
"A lot of Asian hedge fund managers place too much emphasis on stock picking rather than instrument selection. We see asset selection, portfolio composition and timing as equally important factors."
To spearhead the new initiative, Artradis brought Andrew Wong on board earlier this year. Wong previously taught at Harvard University and worked with O'Connor in the US.
Heading up the research effort for the new funds is Ian Roberts, a long-time Asia veteran whose background includes running public and private equity portfolios as well as conducting equity research. Diggle says that he will be looking to build up the research team in coming months.
Explaining why Artradis is well positioned to offer the upcoming fund series to investors Diggle concludes, "We've spent the last three years trading in a conservative manner and understand the importance of capital allocation and management. Our existing strategy is very stock borrow intensive, so we are very familiar with navigating this market." Founded by Steve Diggle and Richard Magides in 2002, Artradis has quickly gained momentum. The Barracuda fund currently has over $400 million under management.