Artradis collapse a failure of judgement, not risk management, says co-founder Diggle

Artradis was one of Asia’s most successful hedge funds until it hit difficulties in 2009 and 2010 that resulted in losses of $700 million and culminated in its closure in late February. But the fund’s co-founder says error of judgement and a lack of hedging, linked with exchange-traded options premium decay, rather than poor risk management, caused the failure of the fund.

Stephen Diggle, co-founder of Artradis, the Singapore-based hedge fund that closed with losses of $700 million in February, refuses to blame risk management shortcomings for the downfall of the hedge fund. But he admits his judgement could have been better. "We bought lots of an asset that was not performing - from a trading point of view we should have stopped earlier. It's not a risk management failure," he says. "Our job was to be long volatility. Our judgement was poor but after making a lot