TM Cerno Select2020-07-08T16:31:27+00:00

TM Cerno Select

TM Cerno Select Fund Information

TM Cerno Select is a global strategy investing across multiple asset classes with an unconstrained approach to asset allocation. The return target is CPI +3%.

We aim to preserve and grow capital through investing in an approved range of investment vehicles, including direct securities, passive funds and specialist active managers.

The fund is domiciled in the UK under the UCITS regime and trades daily at net asset value (NAV). A sister fund, Cerno Unconstrained, follows the same strategy and is domiciled in Ireland, also under the UCITS regime.

For more information on TM Cerno Select please contact Tom Milnes on 020 7036 4126 or at [email protected].

Funds page ink drawing

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Key Investors Information

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Please ensure you read the Key Investor Information Document (KIID) for the fund selected before making an investment decision. The document contains important information including risk factors and details of charges.

TM Cerno Select Fund Managers

James Spence
James SpenceCo-fund Manager
James is a co-founder of Cerno Capital and lead manages a number of the firm’s collective and private portfolios. After qualifying as a chartered accountant in London (Coopers & Lybrand, 1989) he relocated to Asia. Between 1991 and 2004 he worked as an equity analyst, head of research, and latterly as an equity strategist at WI Carr, Paribas, HSBC and UBS, based variously in Hong Kong, Singapore and Jakarta. James graduated from the University of St Andrews, Scotland with an MA in Philosophy & Logic in 1986. James is a Member of the Chartered Institute for Securities & Investment.
Fergus Shaw
Fergus ShawCo-Fund Manager
Fergus is a Partner at Cerno Capital and surveys the full range of the firm’s investments on a bottom up basis and is principally engaged in manager and security selection. He began his investment career at Valu-Trac Investment Management in 1995, where he worked in their global equity and asset allocation products. He worked for Russell Investments as a Portfolio Manager of UK equities (2001-2006) and Asian equities (2006-2009). Fergus graduated from Edinburgh University with a BCom (Hons), holds the CFA charter and is a member of the CFA Society of the UK. Fergus is a Director of the Salters’ Management Company.

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Latest Investment Letter by James Spence

The outbreak of Novel Coronavirus (2019-nCoV) in Wuhan revives memories of the 2002-3 SARS virus which broke out of Guangdong province and was responsible for 648 deaths in Hong Kong and China and 127 deaths elsewhere in the world. It should not be forgotten that more deadly epidemics have taken place between these two viral outbreaks, namely H1N1, Ebola and MERS.

The writer was a resident of Hong Kong in 2002 and can recollect the palpable fear that beset the territory at that time. Even when its lethal nature was acknowledged (following several months of attempted cover up by the central authorities) protocols at hospitals remained inadequate in the rush to treat patients. Doctors, nurses and orderlies worked in the knowledge they were at great risk of contracting the virus which at that time was a great deal more fatal than the eventual, overall fatality count. We remember them.

Before SARS came along, Hong Kong was betwixt the horns of two deflationary events: falling property prices and an equity bear market – in sync with the rest of the world – following the Tech stock boom of the 1990s.

Just when things couldn’t seem to get worse, one of Hong Kong’s favourite film and Canto-pop stars, Leslie Cheung, took the lift to the top floor of the Mandarin Oriental, asked the health club attendant there for an orange juice, smoked a cigarette on the balcony and then threw himself off the top of the hotel. Those were dark days.

By mid-2003, asset prices in Hong Kong had been falling for three years. Colleagues undertook statistical work on SARS cases and that pointed to a steady linear progression of cases, not the more feared geometric development. New cases began dropping sharply in Hong Kong in April and May 2003 and, in that month the stock market bottomed and the property market shortly thereafter. The opportunity for investment was truly substantial at that time – an example of what James Montier at GMO would call “a fat pitch” in baseball terms. The 12 month return on the Hang Seng Index from that low was 45%.

Epidemics, both ancient and modern have recognisable patterns that repeat: the enervation of primeval fears, the surge in media mentions looping into elevated and obsessive communications. The exchange of information becomes so overwhelming that the positive effects of better protection, hygiene and antivirals is less well mapped and can easily be missed. “Once the faintest stirring of hope became possible, the dominion of plague was ended.”

Epidemics are a little bit interesting to the numbers minded. When the basic reproduction number is above 1, the disease in increasing in its infectious power, when it is below 1, it is falling. Each outbreak of disease has a distinct range, but these are averaged ex post and need not be consistent across outbreak centres and certainly vary with a mutating virus.

Investors should, though, take care in applying post SARs investment fundamentals to the present nCoV scare. The 1.3%-2% fall in headline equity indices on 27th January could only be considered large when compared with the trivial corrections of the past 12 months. We remain in expensive and momentum driven markets and the opportunity set is nowhere near as good as it was in 2004. It should be remembered that – as travel restrictions bite – China was just 5% of world GDP in 2003 but 17% today.

Looking at more medium term measures, statistical measures of sentiment are flashing red even if more fuzzy and subjective polls of investor sentiment do not exhibit quite such exuberance. We should be impressed by the power of trending markets to shrug off topical threats such as the 3rd US Presidential impeachment in history, a further fracturing of relations in the Middle East, climate disasters and trade wars. “Stupidity has a knack of getting its way”.

With these fairly acknowledged, we remain in that uncomfortable space where it has long  been difficult to connect the traded prices of financial assets with “the cycle”. The cycle has been both elongated and distorted. The resultant risk – not proximate perhaps but out there for sure – is that deep corrections in the prices of financial assets become themselves an economic event.

A final thought from Albert: “Everybody knows that pestilences have a way of recurring in the world; yet somehow we find it hard to believe in ones that crash down on our heads from a blue sky. There have been as many plagues as wars in history; yet always plagues and wars take people equally by surprise.”*


*All quotations from The Plague (La Peste) by Albert Camus written in 1947

By |January 29th, 2020|

TM Cerno Select DDQ

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TM Cerno Select Key Contacts

Tom Milnes
Tom Milnes
Business Development Director
[email protected]
020 7036 4126
Olivia Martin
Olivia Martin
Client Relations and Business Development
[email protected]
020 7036 4123


TM Cerno Select Fund B Acc
TM Cerno Select Fund C Acc

Fund Facts

Fund Size £104.0mn
Fund Launch Date 04/09/13
Legal Structure UK OEIC (UCITS)
Dealing Frequency Daily
Suitable for SIPPs/ISAs/JISAs Yes

Available Share Classes

Name B Number C Number
Ongoing Charges 1.34% 1.09%
Cerno Capital AMC 1.00% 0.75%
Allocated Managers’ Fees 0.15% 0.15%
Other Fees (incl. running costs) 0.19% 0.19%
Investment Minimums £5,000 £1mn

Risk Data

Net Equity Exposure* 71.0%
Gross Equity Exposure* 71.0%
Short Equity Exposure* 0%
Long Equity Exposure* 71.0%
Best Month* 4.1%
Worst Month* -3.8%
Sharpe Ratio 0.7
Calmar Ratio 0.7
Upside Capture* 50.2%
Downside Capture* 58.7%
Maximum Drawdown* -7.7%
Annualised Volatility* 6.3%
Beta (vs World Equity Index)* 0.8

Fund Codes

ISIN SEDOL Bloomberg

Fund & Risk Ratings

Dynamic Planner 5 Profiled


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