Winton Group

Winton Group, Ltd
Private
Industry Investment management
Founded February 1997 (1997-02)
Headquarters London, England
Key people
 David Harding
AUM $28.5 billion as of December 2017[1]
Number of employees
 412[1]
Website www.winton.com

Winton Group, Ltd (which includes Winton Capital Management) is a British investment management firm founded by David Harding. It is a quantitative investment manager whose trading decisions are guided by models developed from scientific research and mathematical analysis. In the United States, Winton is registered with the Securities and Exchange Commission as an investment advisor and with the Commodity Futures Trading Commission as a CTA, and is authorised by the Financial Conduct Authority in the UK. The company trades on more than 100 global futures markets in a wide variety of asset classes and on global equity markets. The firm was launched with $1.6 million in 1997[2][3] and as of December 2017 it held $28.5 billion in assets under advisement.[1] Winton Group has eight offices around the world: London, Hong Kong, New York, Shanghai, Sydney, San Francisco, Tokyo and Zurich.[4]

History

Early years

In 1996, physicist and investment manager David Harding left Man AHL (formerly Adam, Harding and Lueck), a systematic managed futures fund and created Winton.[5][6] Using Harding's middle name,[7] the firm began trading in October 1997 with the Winton Futures Fund.[8] When conceptualizing the firm, Harding drew inspiration from Renaissance Technologies, a Long Island, New York hedge fund management company. Winton employs statisticians, engineers and physicists, to pursue investment strategies based on scientific research and analysis.[9] According to Harding, Winton had difficulty attracting clients as a commodity trading advisor (CTA), because investors preferred hedge fund strategies that focused on the equity market rather than futures contracts.[7] However, using fees that were lower than industry standards, the firm was able to secure investors.[7][10]

In October 1997, Winton's first futures fund was launched with approximately $1.6 million in assets. The fund lost nearly 13% of its value in the first month but ended the year up 3.49%. In the following three years Winton returned gains of: 52.18% in 1998, 15.07% in 1999 and 10.44% in 2000. By November 1999, the firm had raised $100 million in capital from investors.[5] That same year, Winton sought investors in the Japanese markets.[11] The positive returns continued until late 2001, when there was a four-month period of drawdowns following the September 11 attacks.[5] From the company's inception through the mid-2000s, its annual rate of return was approximately 19%.[12] The number of employees and the firm's assets under advisement grew significantly in 2004, reaching $1 billion.[5]

Company milestones

  • In 2005, the firm launched the Winton Evolution Fund, which was designed as a multi-strategy fund investing in a variety of financial instruments and securities.[5][9]
  • In July 2007, Petershill Fund, a private equity fund set up by Goldman Sachs Asset Management International, acquired a 9.99% stake in Winton.[12][13]
  • In 2007, Winton was ranked as the third largest CTA by the industry journal Absolute Return.[5]
  • In 2007 it became founding member of the Hedge Fund Standards Board, which sets a voluntary code of standard of best practice endorsed by its members.[14]
  • In 2008, Winton was named Real Business's "most profitable" company[15] and was ranked the third largest private finance company in Britain by The Daily Telegraph.[16]
  • In late 2008, the company opened offices in Hong Kong, their first outside of the UK.[11]
  • In 2010, the company launched the Winton Global Equity Fund which received UCITS approval in Europe.
  • In September 2012, Winton became research consultants with Fortune SG Fund Management of Shanghai to help develop China's first managed futures fund.[17][18]
  • In 2013, media coverage reported that the firm's founder had paid nearly £521 million in British taxes since 2006, including £133 million in 2011 alone.[19]
  • In 2014 the company opened offices in New York,[20] Sydney,[21] and Tokyo.[22] Shanghai offices followed in 2015.[22]
  • In 2016, Winton's San Francisco office opened.[23]
  • Also in 2016, Petershill Fund sold its stake in Winton to Affiliated Managers Group, and Winton changed the name of its holding company from Winton Capital Management to Winton Group.[24][25]

Organization

Operations

David Harding is the company's founder and chief executive officer.[2] Approximately 70% of the firm's employees own shares or share options in the company.[12] Winton employs approximately 450 staff members.[3]

More than 100 of the firm's employees are academics doing mathematical research[12] and studying statistical relationships and trading patterns.[10] These highly trained specialists are organized into research teams, which peer review and test new strategies, gather data and identify trends.[8] While quant hedge funds broadly have struggled for several years just following the 2008 financial crisis, Winton remains a top recruit of quantitative minds.[26]

The majority of the firm's clients reside outside the UK and many are from the United States.[5][6]

Investment strategy

Since its inception, Winton has traded as a commodity trading advisor (CTA). It is regulated by the Commodity Futures Trading Commission as a CTA[7] and by the Financial Conduct Authority in the UK. Winton is also registered with the U.S. Securities and Exchange Commission as an investment advisor.[27]

The firm refers to itself as a "modern investment management company"[28] and employs managed futures strategies using data analysis and modelling to follow trends in global futures markets such as commodities and bonds.[29] After establishing the Winton Evolution Fund and Winton Global Equity Strategy, the firm began offering multi-strategy and equity investment programs that invest in equity markets around the world.[5][30][31]

Winton uses research and quantitative data analysis to identify favourable trends in the market[32][30] and its focus on research differentiates it from its industry companions.[5][32] The firm uses scientific research to collect data[30] and identify patterns and develop statistical tools, which are applied to its investments.[33] Winton relies on continuous research to ensure its trading models have the highest potential for positive returns.[34] Its trading models are informed by relationships identified through applied research of market data;[30] such as volatility estimations derived from a study of the 1988 corn bull market.[34] In recent years, Winton has further developed its statistical research, focusing on big data; according to the Financial Times, in 2013 its machines processed "the equivalent of 30m King James bibles' worth of information every day".[35] In April 2013, Winton was featured in the BBC2 program Horizon: The Age of Big Data for its use of scientific analysis of data, particularly for its capture and processing of large data sets including historical data for the markets that it trades in and newly produced data from thousands of companies.[36]

Winton's futures trading is highly automated and systematic and uses computer algorithms[7] to trade futures in financial assets including equities, currencies, bonds, commodities, livestock and energy[11] in over 100 futures markets worldwide.[5] Winton uses a mix of long-term and short-term trading as part of its strategy[5] and combines uncorrelated strategies to maximize their risk-return ratio.[5][30][29] According to the firm, it uses the same mathematical tools, for research, statistical data analysis, stock selection, and futures investments.[37] From around 2008, the Winton Futures Fund has increased its allocation to cash equities.[38][39]

Assets under advisement

When Winton launched in October 1997, it held $1.6 million in assets.[5] Over the next 3 years the assets held by the firm grew to over $150 million at the end of 2000.[40] By 2004, the firm's seventh year in operation, its assets under advisement reached $1 billion.[41] In the mid-to-late 2000s, the firm experienced large inflows of capital, leading to its assets under advisement increasing rapidly from $4.8 billion in mid-2006,[6][12][42] to $12.4 billion in 2009.[29][43] Between 2010 and 2012, Winton's total assets under advisement increased by almost $15 billion, from $13.7 billion in June 2010 to $28.5 billion in February 2012.[37] As at December 2017, Winton's assets under advisement totaled $28.5 billion.[1]

References

  1. 1 2 3 4 "Winton Annual Report 2017" (PDF). Winton. Retrieved 16 May 2018.
  2. 1 2 Ben Wright (2 March 2014). "Winton Capital Plans Expansion Drive With Up To 100 New Hires By Year-End". The Wall Street Journal. Retrieved 7 April 2014.
  3. 1 2 Cookson, Clive (25 November 2016). "Winton Capital's David Harding on making millions through maths". Financial Times. Retrieved 25 April 2017.
  4. ↑ "About Us". Winton. Retrieved 25 April 2017.
  5. 1 2 3 4 5 6 7 8 9 10 11 12 13 Barry Cohen (November 2007). "Winton's Winning Formula". Absolute Return.
  6. 1 2 3 Bill McIntosh (22 January 2007). "Winton Capital, Dexion Team Up for Fund IPO". HedgeWorld Daily News.
  7. 1 2 3 4 5 "Profile: Winton wonderland". FOW Magazine. October 2006.
  8. 1 2 Loch Adamson (May 2009). "New World Masters". Alpha Magazine.
  9. 1 2 Leah McGrath Goodman (April 2008). "The Wizard of Winton". Trader Monthly. p. 106.
  10. 1 2 Jack Willoughby (29 June 2009). "Trend Tracker". Barron's Hedge Funds.
  11. 1 2 3 Tomoko Yamazaki; Komaki Ito (12 July 2009). "Winton to Start Japan Fund, Hire H.K. Staff in Asian Expansion". Bloomberg. Retrieved 14 September 2011.
  12. 1 2 3 4 5 Bill McIntosh (8 October 2007). "GSAM Fund Buys Stake in Winton". Reuters Hedgeworld. Retrieved 6 May 2013.
  13. ↑ "Goldman fund buys 10 percent stake in Winton: report". Reuters. 8 October 2007. Retrieved 14 September 2011.
  14. ↑ Hedge Fund Standards Board. "HFSB Founders & Core Supporters". Retrieved 27 September 2016.
  15. ↑ "Hot 100; Most profitable: Winton Capital". Real Business. April 2008.
  16. ↑ Katherine Griffiths (19 August 2008). "Finance at its very highest; Britain's biggest private companies". The Daily Telegraph (London). p. 7.
  17. ↑ Devasabai, Kris (26 April 2013). "CTAs eye swap futures". Risk.net. Infopro Digital Risk Limited. Archived from the original on 3 December 2017.
  18. ↑ Harriet Agnew (25 September 2012). "Winton backs China's first managed futures fund". Financial News. Retrieved 30 April 2013.
  19. ↑ Nicholas Hellen (30 September 2013). "Rich man pays his taxes — shock". The Sunday Times. Retrieved 29 April 2013.
  20. ↑ Delevingne, Lawrence (10 June 2014). "The British (hedge funders) are coming!". CNBC. Retrieved 13 September 2017.
  21. ↑ Smith, Mark (28 April 2014). "The British (hedge funders) are coming!". Financial Standard. Retrieved 13 September 2017.
  22. 1 2 Eschenbacher, Stefanie (3 February 2016). "Winton on the hunt for Asia recruits". Financial News. Retrieved 13 September 2017.
  23. ↑ Kishan, Saijel (22 December 2016). "Data Scientists Making Millions Vie With Fund Managers Over Pay". Bloomberg. Retrieved 13 September 2017.
  24. ↑ Childs, Mary (6 June 2016). "Goldman Sachs sells stakes in 5 hedge funds to AMG!". Financial Times. Retrieved 13 September 2017.
  25. ↑ "Winton Group Limited". Companies House. Retrieved 13 September 2017.
  26. ↑ Paul Clarke (December 5, 2013). "Quant hedge funds struggle to hold on to mathematical whizz kids". eFinancialCareers.
  27. ↑ "Investment Advisor Search Results". adviserinfo.sec.gov. Securities and Exchange Commission. Retrieved 29 April 2013.
  28. ↑ David Harding (Spring 2008). "What's in a name? Where are CTAs going?". Global Review - Hedge Fund Intelligence.
  29. 1 2 3 "Harding's Hedge Fund Thrives on Surprise". Reuters Hedgeworld. 16 October 2009.
  30. 1 2 3 4 5 Martin Steward (1 December 2010). "Winton's global equity strategy". Investment and Pension Europe.
  31. ↑ Stephen Taub (4 March 2014). "The Morning Brief: David Harding's Winton Capital Plots Big Expansion". Alpha Magazine. Retrieved 7 April 2014.
  32. 1 2 "It's rocket science: MacBoffins crunch the numbers". The Australian. 13 October 2005. p. 29.
  33. ↑ "A Head for Numbers". Hedge Fund Review. August 2009.
  34. 1 2 Bill McIntosh (April 2010). "CTAs Focus On R&D Awaiting Trend Breakout". The Hedgefund Journal.
  35. ↑ Sam Jones (20 February 2013). "Winton Capital have curious minds to supply science to finance". Financial Times. Retrieved 29 April 2013.
  36. ↑ "Big Data in the 21st Century..The New Digital Battlefield..." Business Information Portal. 11 April 2013. Retrieved 29 April 2013.
  37. 1 2 Jez Liberty (20 March 2012). "Trend Following Wizards update February 2012;".
  38. ↑ Anita Raghavan (7 October 2013). "A Recent Flourish for Winton Capital". The New York Times. Retrieved 7 April 2014.
  39. ↑ "Winton Capital Management – Best Managed Futures/CTA". Hedgeweek. 26 March 2013. Retrieved 7 April 2014.
  40. ↑ "Fast finish makes 2000 a winner". Managed Account Reports. January 2001. p. 1.
  41. ↑ "Winton passes $1b mark on seventh anniversary". Managed Account Reports. October 2004. p. 1.
  42. ↑ Neil Behrmann (11 May 2006). "Managed futures funds and CTAs gain but beaten by commodity indices". Infovest21 News.
  43. ↑ Taub, Stephen (Apr 2009). "The Hedge Fund 100: Our Rankings of the World's Biggest Single Manager Firms". Alpha Magazine.
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