Winton Capital suffers rare slip as fund fees fall

Michael Bow
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WINTON Capital Management, one of Europe’s biggest hedge funds, saw turnover and operating profits slide last year after it fell short on some of its performance targets.

The company, established by hedge fund pioneer David Harding in 1997, posted £192.9m in turnover for the year ending 2012, down from £350.6m in 2011.

This led to a fall in operating profits from £232.6m to £84.3m, while profits after tax slid £161.9m to £58.6m, according to annual account filings at Companies House

Hedge funds traditionally charge a flat rate management fee of one to two per cent on assets managed and a 20 per cent performance if they reach certain targets although Winton is known for charging a lower base fee of one per cent.

It has a high water mark for performance on its funds and if it tops the level set then it receives a performance fee, in keeping with the industry.

The Winton Future Fund, which has around $10bn of assets, is the company’s flagship fund but had a rare fall last year after dipping 3.5 per cent – leading to lower performance fees and, subsequently, revenues.

It is only the second time in its history the fund has had a down year. This year the fund is thought to be up about 3.5 per cent.

The company also has about $14bn in managed accounts and $500m in a traditional long-only equity strategy.

The company said in its accounts that total assets fell by eight per cent from $28bn at the end of 2011 to $26bn.

“Despite the short term performance of the business, the company has maintained its long term strategy of investing for growth and continued to hire staff,” it said.

The company’s head count increased from 218 people at the end of 2011 to 262 at the end of 2012.

Winton is the product of University of Cambridge-educated physicist Harding and previously founded AHL, the quantitative investment fund which was eventually sold to FTSE 100 Man Group.

Winton declined to comment.