SHANGHAI, Oct 8 (Reuters) - Global hedge fund giant

Winton suffered a sharp drawdown in its China strategy as

Beijing's stimulus package last month triggered a surge in local

stock and commodities markets, highlighting risks for

trend-following money managers from China's policy shocks.

The London-based fund's onshore China strategy, which makes

directional bets in the futures market on assets ranging from

stocks and bonds to metals, has plunged more than 8% in value

since Sept. 20, wiping out all gains for this year, according to

two investors and a performance record.

The data-based, trend-following investor, which in August

was bearish on China stocks and industrial metals, and bullish

on bonds, appeared to have been caught off-guard when Beijing

unveiled a raft of stimulus policies on Sept. 24, sending share

and metal prices surging, and treasury prices plunging.

"Many investors were caught unprepared by the extremely

abrupt policy shift," said Tim Cao, a Shanghai-based hedge fund

manager, who also invests in futures.

"Many trend-following, quantitative strategies are suffering

because history data had no way to predict something like this,"

he said.

The net asset value of a Winton China product stands at

2.443 yuan per unit, latest data disclosed to an investor

showed, down 8% from 2.667 yuan on Sept. 20, before China's

blistering stock market rally. For the year, the product lost

0.2%, and over the past three years, it lost 3.4% in value.

That compares with the strategy's biggest drawdown of 11.28%

over the past five years.

Winton declined to comment.

Winton, founded in London by David Harding in 1997, began

trading onshore China futures in 2010, and has set up a local

Chinese unit which currently manages assets in the range of 2

billion yuan to 5 billion yuan ($284 million-$709 million),

according to official data. It manages more than $12 billion

globally.

Winton trades more than 55 futures instruments in China

linked to assets including stocks, bonds, metal and agricultural

products, according to a company brochure.

An August report showed Winton held long positions in

precious metal and bond futures, and short positions in stock

index futures, as well as industrial and agricultural products.

China's bluechip index CSI300 has jumped more than

30% since Sept. 20, an index tracking metals in China

has gained as much as 7.4%, while China's 30-year

treasury bond futures has plunged as much as 7%.

"The drawback is understandable as sentiment had been gloomy

since July, and the Sept. 24 policy exceeded expectations,

causing a trend reversal," said an investment advisor who sells

Winton's China products.

However, "Winton's strategy is time-tested, and proved to be

effective in capturing long-term trends ... It doesn't change

with the market," said the advisor who declined to be named.

Winton said in its brochure that its investment process is

systematic and rule-based, and it has in place a

carefully-designed risk-management framework that takes into

account surprises.

($1 = 7.0537 Chinese yuan renminbi)