Today, CTAs are a well-known strategy and investors have “a much more realistic assessment of the performance characteristics over time that they can expect, of the likely Sharpe ratio of the strategy,” Judes said.
Winton is a systematic manager with a flagship multistrategy hedge fund and trend-following CTA strategies.
Judes said the challenge is to reduce the drawdowns CTAs can experience. In 2023 the average drawdown was -4.74%, according to PivotalPath.
“The idea is that investors can then remain allocated to it through… that cycle, and then they have the allocation in the years where it really adds value,” he said.
Judes joined London-headquartered Winton in 2008 as a researcher. Today, as co-CIO along with Carsten Schmitz, Judes focuses on investment management and research activities at the firm that was founded in 1997 by David Harding, who today serves as executive chair. Earlier in his career, Harding co-founded managed futures hedge fund AHL, which was sold to Man Group in 1994.
North American institutional investors make up 20% of Winton’s $13 billion in assets under management, a spokesperson for the firm told Pensions & Investments
Marcus Frampton, CIO of the $80 billion Alaska Permanent Fund Corp., Juneau, confirmed to P&I that the sovereign wealth fund has an approximately $200 million investment with Winton.
Winton has weathered tough periods in the past.
The hedge fund was managing $33.7 billion at the end of 2015. The firm shifted gears to a multistrategy focus and also went through a period of tough performance and investor outflows by pension funds. In 2018, Winton Group lost roughly $5 billion in assets.
During a difficult 2020, the firm saw its assets under management drop to $7.3 billion, according to the Financial Times.
As a systematic investor, Judes said his job isn’t to forecast what’s going to happen in the future, but to make sure strategies are as strong as possible for “dealing with whatever environment comes our way.”
“Sometimes people say volatility is good for a systematic strategy. Sometimes people say volatility is bad. I think the truth is that there’s no particular link,” he said.
Adding to multistrategy
In 2019, Winton completed the transition of the Winton Fund into a multistrategy offering from what was originally a trend-following offering. Today it manages approximately $4.5 billion in multistrategy, Judes said.
He said they’re looking to continuously enhance the Winton Fund by adding new, diversifying components. Some additions over the years have been in long/short equities, alpha capture, commodities strategies, a credit program that trades long/short corporate bonds and credit default swaps and an allocation to a China CTA strategy.
Quantitative credit is another area within multistrategy that Judes said is “quite difficult to make systematic.”
“Credit markets are still very high touch in comparison with equities and futures, there’s not anywhere near as much electronic activity. And I think the temptation, which often people have, is to try and take the signals that they develop for equity strategies and then apply them to bonds,” he said. “And we haven’t found that that works out particularly well, so you have to find credit-specific strategies.”
The next addition Winton is looking at over the coming six to 12 months is volatility strategies. The firm has made a senior hire, Judes said.
For the year through Sept. 30, Winton’s multistrategy fund was up approximately 7.6% and its diversified macro strategy was up 4.1%, according to figures seen by P&I.
The Winton Fund finished 2023 up 5.7% while the diversified macro was up 10.1%.
Talent, succession and the path forward
Being a systematic and quantitative firm has helped Winton with recruiting, Judes said.
“We’re not siloed into pods which aren’t allowed to talk to one another,” he said, adding, “you find particularly quants often are placed in relatively small silos in other firms, and the people around them are also often not necessarily quantitative.”
It’s typical for Winton to interview about one person a day on average, he said.
“It’s a great time to be to be hiring. There’s certainly competition, and there’s certainly been an increase in the price level of talent, but there’s no shortage of it,” Judes said.
London is a great place for hedge fund talent and he’s seeing a greater flow of candidates than he can ever remember seeing before. He attributes it to the city’s rapid opening after the COVID-19 pandemic as well as many candidates realizing the benefits of being in a financial center, especially after many people moved to other locations during the pandemic where it can be more difficult to find jobs in finance.
Judes stepped into the co-CIO role in 2020 when Winton underwent its transition. Many hedge funds have had bumpy public succession journeys.
Winton founder Harding decided to step back from day-to-day management of the firm in 2020 and delegated management to an eight-person committee. Judes said it has been a “big competitive advantage” to have solved the succession issue.
“The people in the team are relatively young,” he said. “We’re mostly in our 40s. So, when you ask, ‘Well, what do things look like for the next 10 years?’ The answer is, 'it’s the people you can see in front of you as you know exactly who you’re backing.'”
