North American investors are helping Winton Capital Management Ltd. make progress — albeit slowly — toward its founder's goal of becoming a $100 billion company.
The firm's ticket to quadrupling its assets under management is unlikely to be one of its scientifically designed managed futures hedge funds. Rather, it is coming from its more humble, far cheaper long-only global equity strategy.
Winton Capital managed $25.5 billion as of June 30. The vast majority of the assets are in lucrative managed futures hedge funds for investors that include the $130 billion Teacher Retirement System of Texas, Austin; the £15.6 billion ($26.7 billion) Pension Protection Fund, London; and the $23 billion Texas County & District Retirement System, Austin.
By contrast, there are only two North American institutional investors in the Winton Global Equity strategy, but they have pushed the strategy closer to the $1 billion milestone with aggregate investments of $650 million this year. Another $200 million of mostly non-institutional assets from a European wealth management platform also is invested in the strategy.
The $4 billion Colorado Fire & Police Pension Association, Greenwood Village, invested $200 million in the global equity fund in early July, having invested $40 million in Winton Capital's Diversified Futures Fund earlier this year. The other North American investor could not be learned.
Winton's flagship managed futures strategy was launched in 1997, while its long-only global equity approach made its debut in 2009.
Like many hedge fund managers hurt by the financial crisis, “we knew we had to add a few more strings to our bow,” said David W. Harding, Winton Capital's founder, CEO and chairman, in an interview from the company's London headquarters.
Winton's research crew, overweight with Ph.D.s in mathematical and scientific disciplines, set to work fleshing out Mr. Harding's theory that the same expertise in computational analysis and inference they used to develop trend-following trading systems could be applied to global equity markets.
The result was a 130/30 strategy that launched in 2009. But by the autumn of 2010, it had morphed into a long-only global equity strategy that used a trading system similar to that Winton Capital used for its various managed futures hedge funds.