Winton Diversified UCITS has many positive elements, but its equity component remains a headwind.
Winton Capital has continued to benefit from its clearer vision and streamlined operations. A renewed focus on its core competencies sets the foundation but the firm continues to evolve its multistrategy offering but without the equity beta reliance seen in many peers. The portfolio continues to materially, but organically, deviate from its composition of only a few years ago. The team continues to be stable and is growing in selected pockets. The co-CIO structure has bedded down well, and we’ve seen the group grow confidently into their positions. Winton continues to opportunistically bring in external talent, adding a new energy and focus. Its new office space appears to rectify some of the old silos that existed across its research and development teams. It is also expanding selectively again overseas, more representative than full-blown research locales. It is pleasing to see this greater level of control after the excesses of previous expansions. The research and investment management component accounts for around 40% of the firm’s employees.
Winton's 2020 revamp of its risk allocation toward the trend-following component was well-timed. The past couple of years have provided a structural tailwind for many trend-followers, but the firm continues to steam ahead adding more strategies and signals to this multistrategy offering. Systematic macro was a strong contributor during 2023, and its alpha capture initiative shows strong promise, but the equity market-neutral portion still struggles versus the risk allocated to it. Fees remain high here, so all areas of the portfolio need to deliver. Winton's process keeps on evolving, but the equal risk budget allocation is not as dynamic as other multistrategy offerings. We are waiting to see whether the introduction of some of the firm's newer areas of focus can reduce the equity drag and help the diversity and performance of this strategy. |
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