Harding reveals ambitious plans for Winton

David Harding says he has no intention to take Winton Capital Management public. He has ambitious plans to grow the business into a major investment management company as he remains at the helm

David Harding says he does not intend to take Winton Capital Management public. He plans to grow the business, which has $26 billion of assets under management, into an investment management company based on financial mathematics.

Winton executes a systematic trading program in which it can hold long or short positions in futures and equity markets around the world. The program blends short-term trades with long-term trend following, incorporating multiple periods and systems.

Harding believes Winton has a good base from which it can expand as its products can be sold throughout the world and are not limited to narrow national boundaries. “We make a disproportionately high amount of money compared to some other businesses that are more trapped domestically,” he says.

However, he does not want Winton to be seen as just a trend-following CTA. Harding says the company is evolving into a global quantitative investment company trading both futures and equities.

“We are evolving into what I would call a contiguous area, which is financial mathematics and time-series analysis applied to a larger number of liquid markets. We’re trying to evolve in that direction without losing the allegiance and the faith of our existing investor base and without laying ourselves open to accusation of hubris or style drift.”

He says Winton’s expertise can be taken outside the relatively narrow application at present and into a broader market context. “This is an opportunity for further diversification and making our investment product better.”

Harding still expects to be active at Winton a decade from now, when he hopes to have created a successful investment management firm that is more than just a hedge fund. “[Our clients] want us to trade using financial mathematics or buy and sell investments in fairly liquid investments,” he says. “I don’t believe they above all else want us to be a CTA or a trend follower; they really want us to make money.”

Since Harding set up Winton, trend-following managed futures has become a big industry. However, Harding does not think it will remain “a very demarcated industry from the rest of the money management industry in the long run”.

Harding sees no reason Winton’s trading system cannot be applied to others. He says it will become just one of many strategies as the lines become more blurred. “Just as we’re going into equities, the equities are going into managed futures as well.”

Competitors of Winton have also seen this trend. BlueCrest and Man have both diversified and expanded into cash equities, for example. “The big players in managed futures are not just managed futures firms anymore,” says Harding.

“We want to carry on developing Winton as a successful business over the coming years, doing something innovative, which is this financial mathematic research using computers to build big databases and really studying quite difficult areas of the application of statistics to non-stationary, non-parametric data,” he says.