Artradis says assets up on volatile Asia

SINGAPORE (Reuters) - Singapore's Artradis Fund Management said on Tuesday its assets grew almost four times in the last year to $4 billion as it profited from increased volatility in Asian stocks.

But matching last year's strong performance may not be easy as financial risks are now more accurately priced, Julian Ings-Chambers, a managing director at the firm, said at the Reuters Hedge Funds and Private Equity Summit in Singapore.

"It's unlikely that we are going to repeat the same performance of last year simply because the mispricing of risk has largely been removed," Ings-Chambers said.

Ings-Chambers said stock market volatility would remain high this year as the market still needed to reduce excessive borrowing in the financial system, despite the Federal Reserve-led rescue of Bear Stearns BSC.N that prevented a meltdown in the U.S. financial sector.

"What it (the Fed) hasn't done is to remove the core problem of what is unsettling markets at the moment, which is the de-leveraging process that over the last six months has been extremely painful," Ings-Chambers said.

"I expect markets to have moments of extreme concerns again later this year."

Artradis' two core funds that bank on making money when markets are volatile have performed well amid the recent market downturn.

The AB2 Fund rose 57 percent last year and has gained nearly 18 percent so far this year. The Barracuda Fund rose 35 percent last year and is up almost 11 percent so far this year.

As a result the firm's existing clients poured more money into its funds, he said.

Of the $3 billion increase in assets the hedge fund manager saw since early 2007, about half came from new money by existing investors, mainly into its two long volatility funds -- Barracuda and AB2 -- and the rest came from higher returns.

"The market that we benefited from the most last year was Hong Kong and the (China) H-shares, where we had felt for some time that the opportunities were substantially mispriced," Ings-Chambers said.

"As risk repriced, clearly that was a difficult period for the markets and the volatility rose quite substantially in some markets and the Barracuda and (AB2) funds benefited from that."

Hong Kong's Hang Seng index .HSI is down 12.5 percent so far this year, while Hong Kong-listed mainland firms' H-shares .HSCE are down 18 percent.

Ings-Chambers said volatility in the Hang Seng index rose to a high of 40 vols last year from its usual level of around 20, while H-share vols rose to 55 from a typical 25.

Vols measures implied volatility in markets due to the change in stock prices. Ings-Chambers said there was room for more volatility in Japanese stocks where investors have still not fully priced risk.

Artradis, founded in 2001 and based in Singapore, is an absolute return asset management company focusing on Asia.

Ings-Chambers said Artradis Russian Opportunities Fund, which was launched early last year, has grown to $130 million and the firm has a medium-term target of $500 million for the fund.

(For summit blog: summitnotebook.reuters.com/)

(Reporting by Saeed Azhar and Kevin Lim, editing by Neil Chatterjee and Sue Thomas)