Robert Harris’s 2011 thriller, The Fear Index, features a fictional physicist who develops a computer system to manipulate the financial markets, before seeing his creation spin out of human control.
It’s a fascinating examination of the hi-tech speculators who use powerful computer programs based on algorithms to sift through mountains of data in the hope of spotting patterns or anomalies that might make money.
But though Harris’s novel suggested such practices could become a threat to global economic stability, one man who proves you can harness such technology and still be a force for good is David Harding.
Indeed, the hedge fund manager who gave £100 million to the University of Cambridge could not be further away from the stereotype of the brash City billionaire with more money than class.
Hedge fund tycoon David Harding, 57, who studied physics at the university 40 years ago, donated £79 million to fund scholarships for PhD students. David is pictured with his wife Claudia
He is a mathematical super-brain, and, as well as his jaw-dropping generosity, he is that rarest of beasts: a financier who doesn’t dodge his taxes. The 57-year-old has been at pains to point out that as an individual and through his company, Winton Group, he has in the past decade handed over £1 billion to the taxman.
The white-haired fund manager travels each day from the mansion in Chelsea he shares with his German-born second wife Claudia, 39, to the nerve centre of his multi-billion-pound empire in Hammersmith, west London.
Those who have ventured inside his lair report he has a life-sized statue of Paddington Bear designed by the late architect Zaha Hadid, and the walls are adorned with prints by French artist Raoul Dufy celebrating science and technology.
The Dufys are in character, for Harding has a justified reputation for having a brain the size of a planet.
He graduated from Cambridge in 1982 with a first in natural sciences, specialising in theoretical physics.
When not crouched over his mathematical models, he was a pink-haired punk fan who loved Babylon’s Burning by The Ruts, and was an admirer of Siouxsie and the Banshees. Rather than don a lab coat, however, he decided to try his hand in the City, where the idea that mathematical and scientific thinking could be used to make money on the markets was beginning to take root.
By the time he was 26, he had co-founded a hedge fund group, AHL, which was later sold to giant investment house Man Group. In 1997, he set up Winton (his middle name).
Harding set out his notions for using science in the financial sphere as early as 1994, in a learned paper called Making Money From Mathematical Models, published by the Royal Society.
He says his thinking was for years treated with ‘intellectual scorn and derision from everyone’, but he had the last laugh, earning his investors billions and himself a huge fortune. He owns just under 54 per cent of Winton, which handed out dividends of £58.3 million in 2017. The firm has more than 300 employees in eight offices around the world, and manages nearly £21 billion in assets.
Harding’s modus operandi is to take big bets on trends in commodities, interest rates and shares. Research at Winton is exhaustive, delving into data on barley and sesame prices from ancient Babylon, and wheat prices in England going as far back as 1209, in order to predict long-term trends.
Critics of computer-driven trading strategies are concerned that if such ‘trend’ funds become more common and bet in the same ways, then an unforeseen event could make them all go down together and destabilise the system.
Winton itself has recently been trying different strategies – after doing well for a long time, last year its assets fell by $5 billion to $23 billion after investors pulled money out because they were disappointed with its computer-driven funds.
Unlike many of his super-rich peers, Harding is not known for ostentation. Rather than throwing a gaudy party, he celebrated his 55th birthday by taking two of his sons walking in the Yorkshire Dales.
His first marriage was in 1992 to Emma Symonds, who a year later gave birth to Arthur, now 25. He and Emma were divorced in 1997.
After Harding’s first marriage broke down he lived with another woman, Julia Fuller, and had another child, James, now 15. A third son was born in 2007. He has two daughters with Claudia – one born in 2013 and the other last year.
Unromantically, he once said Claudia was ‘a junior member of the partnership because I made much of the money before I married her’, though he did add ‘her influence is fairly undeniable’.
One of five siblings, Harding’s father worked in Brussels after the war as a horticulturalist on war cemeteries for the fallen soldiers of the Commonwealth. His mother was a French teacher.
Harding cites his upbringing and the fact his wife is German as reasons he is devoutly pro-European. ‘There are no high-falutin’ reasons for my view other than Brexit is quite unfriendly,’ he said last year.
He acted as treasurer of the Stronger in Europe Campaign, and donated £3.5 million from his own pocket. Was it money well-spent? ‘No, it f****** wasn’t,’ he told specialist magazine Financial News.
Some consolation was that, thanks to bets against the pound and the euro, his funds made more than $1 billion in the days following the Brexit vote.