Winton Capital Management is showing some improvement in the art of investing.
Winton Capital, the money manager well known for its quirky and outspoken founder, a Cambridge University theoretical physicist, recovered from its worst performance since 2008 and posted a gain last month.
David Winton Harding, who studied natural sciences at Cambridge University, set up Winton Capital in October 1997 in modest offices off High Street Kensington, away from the traditional hub of London hedge funds, Mayfair.
The firm started as a commodity trading adviser, using powerful computers to capitalize on trends in various markets. It began with less than $2 million in assets and now manages about $24 billion.
Until a few years ago, investors who visited Mr. Harding in his West London office would often find him with his spaniel, Cosmo. (The dog died, and Mr. Harding has not replaced him.)
Unlike many hedge funds, which send sterile monthly letters to investors unveiling their returns, Winton Capital’s letters are known for having a certain flourish. A letter the company sent in July to investors captures the company’s style.
“We like to think of ourselves as artists,” wrote Matthew Beddall, Winton Capital’s chief investment officer. “However our masterpiece is not a painting but a track record. Since we have not found a way to make time stand still, this track record is being laid down on an ever growing canvas. “We are part of the ‘Alternative Movement’ which seeks aesthetic pleasure in absolute returns and are normally exhibited as part of the ‘Managed Futures’ or ‘CTA’ Collection.”
“Like all artists, we will occasionally stop, stand back and admire our work,” Mr. Beddall continued. “Despite the ideals of absolute beauty visitors to the gallery are quickly drawn to compare the different paintings on show. Just as a painter selects how vivid a color palette to use, different funds choose to use different amounts of leverage.” The florid preamble served as an introduction to a discussion of Winton’s superior risk-adjusted returns since the start of 2010.
In September, Winton Capital’s $10 billion flagship futures fund was buoyed by the Federal Reserve’s surprise move to continue its economic stimulus program at current levels. The step lifted the fund’s stock positions, though Winton Futures gave back some of its gains late in the month as stocks retreated amid signs of a fiscal standoff in the United States. The fund also benefited from short positions on gold and silver to help it rise 3.46 percent in September.
Winton’s jump comes after a shabby showing in August when the futures fund lost 3.81 percent, its worst month since 2008, as stocks fell amid fears of Fed tightening and tensions in Syria.
Despite its roots trading futures, Winton Capital has been moving into new areas lately.
Two weeks ago, Mr. Harding played host to some investors at a conference he holds each year, typically in Oxford. The firm has an office in the Oxford Science Park and likes to cultivate a reputation of applying science to investing. It sponsors a science book prize and, in 2006, it endowed a chair in the public understanding of risk at Cambridge.
Mr. Harding told investors that his firm was seeking to diversify its portfolio and not increase its leverage, or borrowings that are commonly used by hedge funds to amplify investment returns. “I don’t want to go down with a blowup before I retire,” Mr. Harding told investors. One of the areas Winton has been building up, he said, is the firm’s cash equities business.
After a dinner at the Ashmolean Museum of Art and Archaeology, Mr. Harding treated his investors to a night at Malmaison, the former Oxford jail now turned boutique hotel.
Anita Raghavan is the author of “The Billionaire’s Apprentice: The Rise of the Indian-American Elite and the Fall of the Galleon Hedge Fund,” published June 4 by Business Plus.