Common use of Investment Process Clause in Contracts

Investment Process. Winton follows a disc▇▇▇▇▇▇d investment process that is based on scientific analysis of past data. The initial stage of the process involves collecting, cleaning and organizing large amounts of data. Winton uses a wide va▇▇▇▇▇ of data inputs including factors that are intrinsic to markets, such as price, volume and open interest; and those that are external to markets, such as economic statistics, industrial and commodity data and public company financial data. Winton conducts scien▇▇▇▇▇ research into the data in an attempt to quantify the probability of particular markets rising or falling, conditional on a variety of quantifiable factors. Winton’s research is ▇▇▇▇ ▇▇ develop mathematical models that attempt to forecast market returns, the variability or volatility associated with such returns (often described as “risk”), correlation between markets and transaction costs. These forecasts are used in investment strategies that determine what positions should be held to maximize profit within a certain range of risk. Generally, if rising prices are forecast, a long position will be established or maintained and if falling prices are forecast, a short position will be established or maintained. As a result of Winton’s research, Wi▇▇▇▇ ▇▇▇ieves that ▇▇▇ ▇▇vestments made in accordance with this process will have a slightly better than even chance of being successful which creates an expectation of profits over the long-term. Historically, Winton’s research foc▇▇▇▇ ▇▇ developing trend-following strategies that invest in futures contracts (based on data that is intrinsic to markets). However, in recent years, Winton has increased ▇▇▇ ▇▇e of non-trend-following strategies (generally based on data that is external to markets). Winton’s investment s▇▇▇▇▇▇▇▇s are operated as an automated, computer-based system. This investment system is modified over time as Winton monitors its o▇▇▇▇▇▇on and undertakes further research. Changes to the system occur as a result of, amongst other things, the discovery of new relationships, changes in market liquidity, the availability of new data or the reinterpretation of existing data. Most of Winton’s investments ▇▇▇ ▇▇▇▇ strictly in accordance with the output of the system. However, Winton may, on occasi▇▇ (▇▇ch as the occurrence of exceptional events that fall outside the parameters of the research on which the system is based), make investment decisions based on other factors and take action to override the output of the system to seek to protect the interests of investors. For example, if there is a market crash or if trading is suspended on a market or exchange, Winton may attempt to ▇▇▇▇▇e risk by decreasing leverage or liquidating or hedging positions in certain markets. Risk Management. Management of the risk arising from market fluctuations is integral to Winton’s investment p▇▇▇▇▇▇. Investment risk is commonly understood to be the volatility of returns and, where leverage is employed, the most important determinant of such volatility is the extent of that leverage. By forecasting volatility in each market and the correlation between markets daily, Winton is able to for▇▇▇▇▇ the overall volatility of the portfolio and adjust leverage accordingly in order to target a specified level of risk. The volatility of an investment is a statistical measurement of the dispersion of its returns and may be measured by the annualized standard deviation of those returns. Over the long-term, lower volatility is more likely to result in lower profits and lower losses and higher volatility is more likely to result in greater profits and greater losses. Winton measures volat▇▇▇▇▇ using a proprietary model which places greater emphasis on the probability of extreme market movements than many commonly used models.