Assets at David Harding's quantitative investment firm plunged by about $5 billion last year as it shifted strategy and investors lost patience with computer-driven hedge funds.
The money managed by Winton Group slumped to $23.6 billion at the end of 2018, with its flagship fund losing 0.6%, according to investor letters seen by Bloomberg. A spokesman for the London-based firm declined to comment.
The quant powerhouse, previously known for betting on market trends, has been transforming itself into a firm that combines various investment strategies to deliver on a promise of consistent returns. While that helped it outperform rivals and lose less than equity markets last year, some investors headed for the exit.
Winton now also finds itself competing for investors' cash with bigger — and in many cases better-performing — rivals such as Izzy Englander's Millennium Management and Ken Griffin's Citadel. That's pitting algorithms from Mr. Harding's firm against predominantly flesh-and-blood traders who bet across asset classes. While Millennium's money pool gained 4.85% last year, Citadel's Wellington multistrategy fund made 9.1%. Hedge funds as a whole lost 4.5% on average.
Computer-driven funds were whipsawed by sharp reversals in asset prices last year, leading to some of the industry's best-known names such as AQR Capital Management and Aspect Capital losing money. The firms using models to chase securities that are rising or shed those that are in decline, known as trend followers, saw $18.4 billion being pulled last year, the most for any hedge-fund strategy, according to eVestment data.
Quant pioneer Harding — who co-founded the AHL division of the world's largest publicly traded hedge fund firm, Man Group — has been vocal in the past about the challenges the industry faces in generating returns and sustaining the traditional model of charging clients a 2% management fee and taking a 20% performance fee.
Winton "is continuing to fix the roof while the sun is shining," Mr. Harding said in the annual report published last year.