Global equities have now rallied 144% since the depths of the financial crisis in February 2009, even after the recent bout of stock market volatility. Bond prices, meanwhile, have risen nearly non-stop for three decades as yields worldwide have collapsed. Easy monetary policy, ageing demographics or emerging-market economic growth – pinpointing exactly what is behind such long-term trends is difficult, but one thing is clear: buy-and-hold has been a winning investment strategy.
Markets are not always so kind, however. Taking the longer view reveals that the UK stock market has undergone sustained periods without an increase, while the middle of the 20th century saw bond yields rocket. More recently, it took years for equities to recover from the bursting of the dotcom bubble and the global financial crisis. Many investment managers understandably worry about what could happen next.
The Winton Absolute Return Futures Fund offers an attractive, systematic alternative. Systematic investing refers to a rules-based investment process built on data rather than the hunches of individuals, whose trading decisions are taken by computers yet supervised by an experienced team.
The fund follows an active program, which systematically determines positions across more than 80 markets to construct a diversified portfolio that can profit from rises and falls in equity, fixed income, commodity and currency markets. Winton’s quantitative researchers have developed this program over two decades, and today it comprises a collection of strategies that can profit from a variety of predictable patterns in market behaviour.
One such pattern is the price trend – that is, the tendency for rising prices to precede further rises and falling prices to precede further falls – a strategy that Winton has successfully pursued over 20 years. This trend-following strategy only has a faint edge when applied to a single market in isolation. But when it is combined with other strategies and applied to many markets, it is possible to achieve attractive long-term results.
While the Winton Absolute Return Futures Fund launched on 3 July 2017, Winton already has a proven 20-year track record of running systematic, diversified investment strategies. By continuing to pursue ambitious investment in research, data and technology, we hope to produce similarly compelling risk-adjusted results for our investors over the next 20 years – and beyond.