TM Cerno Global Leaders 2018-05-18T16:18:03+00:00

TM Cerno Global Leaders

TM Cerno Global Leaders Fund Information

The best prospect for outperforming the World Equity Index is to invest long term, in a concentrated, high conviction and low fee portfolio and transact only when necessary.

TM Cerno Global Leaders invests in global companies with sustainable competitive advantages delivering above average returns. Its target is to deliver performance in excess of MSCI World Total Return (GBP) on a 3 year rolling basis.

The fund will  hold 25-30 securities, equally weighted, selected according to a distinct investment thesis that accents industry structure, the sustenance of return on capital and secular growth.

For more information on TM Cerno Global Leaders please contact Tom Milnes.

About Cerno Capital

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TM Cerno Global Leaders Fund Manager

James Spence
James SpenceLead 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.

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Latest Investment Letter by James Spence

At the National People’s Congress in Beijing, 2,958 of 2,963 cowed delegates approved the change in China’s constitution to allow the Presidency to be extended beyond the two-term limit set by Deng Xiaoping in 1982. Deng’s then reform was promulgated to prevent the repeat of the Maoism’s attendant madness. In a very large country, disastrous policies have terrible effects on millions. Back then in was murder and starvation, what might be the longer-range effects of a resuscitation of one-man rule in China?

For surely all dictatorships go bad, even the ones that start out well? The possible outcomes need to be understood in a modern context. In today’s world, even in China where an invisible blanket of surveillance and censorship wraps its citizens, it is possible to lampoon the leaders. Xi’s avatar is Pooh Bear: the tubby fellow attaching himself to a pot of honey. “Find the thing you love and never let go.”

When you rule by fear you do not know what your friends let alone your enemies think. All the problems that bestow China from the 12th of March onwards are Xi’s to own. Cadre may be fired, booksellers disappear, businessmen and women interned with impunity but each of these acts will have his imprimatur. Then there is the global economic cycle. China has been a significant outperformer in the past 28 years – all things come to an end.

This is no Maoism. Mao was a romantic ideologue, a rough and unruly man with libertine tastes. Ideology was all, outcomes were slave to ideas – many of them dreamt up by Karl Marx on London’s Marylebone Road and in his cot in Soho. Today’s economic policies in China are not a matter of much argument: global economic domination in certain key sectors, better quality growth at home, double-efforts on surveillance and censorship.

What is authoritarian government shorn of ideology? Without economic fault lines and lacking a dialectic? Britain’s quaint flirtation with Trotskyism under Labour is recherché: a joke if it were not a live possibility.

Other notable things happened in Beijing, although they were less commented. Newly refreshed economic projections called for growth of around 6.5%, dropping the more usual no less than. Buried within this subtle sematic shift, we can discern acknowledgement of firstly where the cycle stands – and it is slowing – but also a nod to the constraints on growth. China is losing market share in manufactured goods because of relative wage levels around the emerging world which no longer favours China. Globalised trade as a percentage of global GDP has risen from 10% in 1990 to 30% today (Source: Paul Donovan, UBS) but is now likely to fall as onshoring trends made possible by automation build. Furthermore, a pronounced population bubble begins to work against China for many decades to come.

Hence the One Belt One Road initiative with its outward impetus and the drive to dominate areas of the New Economy via home grown champions: all staffed by the hundreds of thousands of vocational graduates produced at home and the legion of Chinese being educated in Western universities, many of whom are destined to return home.

Interruptions to world trade in the form of punitive tariffs and crude, monolithic thinking presents a risk and stock markets are justly worried. The Asian view of President Trump is somewhat different to the liberal view of him in the West. He is closer than Obama to what many construes a US President to be. Cowboy attitudes, a bit of a player, a thug in business. The limitations of Trumpenomics lie is in his mono understanding of economic fundamentals and simplistic win-lose mentality.

There is understandable anxiety in Hong Kong. NPC delegates from there received their traditional lecture on stability and integration: the two key words that are bashed into the interlocutors. Integration is construed in economic terms but with political objectives: the long-term desire to assume Hong Kong into a Southern Chinese network of 8 cities: make it less special, less distinct and quash the desire of some to retain its distinctness. Stability is the task of the Chief Executive Carrie Lam, in the post since last year. Educated in Hong Kong and Cambridge, she worked for 17 years within the colonial administration and knows all levels of local government outside-in. She is the fourth post-handover administrator and there have been considerable problems with the past three.

Some commentators suggest Hong Kong will come to resemble Monaco: a super high-priced location run for a local and imported elite. Yet, it is a stretch to compare a principality of 38,000 persons with a sophisticated entrepot of 7.4mn. That said, there is a distinct ambivalence in most peoples’ heads between how values of freedom are construed and the prospects for making money for your family. Hong Kongers have lived with this sort of conflict in values for a long time.

We are of the view that it will become entirely normal to own Chinese shares as part of a global portfolio within the next 5 years. Benchmark index aggregators provide part of the nudge, as will greater ease of access, leaving only Chinese language skills and cultural familiarity as impediments. Western portfolio managers raced to Asia in the 1990s, often to be spotted padding around the sweetly scented corridors of The Sukhothai in Bangkok. The Shanyi Express Hotel in Harbin is less of an obvious draw, hence their slowness to delve beyond the Baidus, the Tencents and the Alibabas.

For our part, we will be shortly investing in a portfolio of smaller capitalisation Chinese shares growing earnings at over 20% per annum, on a valuation of 16x earnings and yielding 2%. These sorts of valuations are long gone in other major markets.

By | March 27th, 2018|

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TM Cerno Global Leaders 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

FAQs on the Cerno Global Leaders Fund

2017 Performance Summary

Performance summaries for the main investment strategies, all numbers after fees. Note past performance is not a guide to future performance.

Global Multi-Asset

TM Cerno Select and its sister fund Cerno Unconstrained are global strategies investing across multiple asset classes with an unconstrained approach to asset allocation.

The return target is UK CPI +3% by investing in an approved range of investment vehicles, including direct securities, passive funds and specialist active managers.

Fund/Strategy 2017 3 Year Inception** Annualised since inception**
TM Cerno Select +8.0% +18.9% +62.2% 4.9%
CPI +3%* +5.7% +14.1% +71.5% 5.5%

*Dec-17 CPI calculated using 3.0% YoY forecast**Strategy inception October 2007: EF Global prior to September 2013, TM Cerno Select thereafter

Global Equity

The Global Leaders Equity Strategy invests in global companies with sustainable competitive advantages delivering above average returns. Its target is to deliver performance above that of the MSCI World Total Return (GBP) Index on a 3-year rolling basis.

The fund will hold 25-30 securities, equally weighted, selected according to a distinct investment thesis that accents industry structure, the sustenance of return on capital and secular growth.

Fund/Strategy 2017 3 Year Inception** Annualised since inception**
Global Leaders Equity Strategy +23.4% +58.3% +73.4% 18.4%
MSCI World TR GBP +11.8% +50.4% +54.8% 14.8%

**Strategy inception October 2014.

Regional Specialty – Pacific & Emerging

Predominantly investing in technology, services, automation and distribution and other asset light business models within Asia Pacific and the wider Emerging Markets.

Fund/Strategy 2017 3 Year Inception** Annualised since inception**
Pacific & Emerging Strategy +20.7% +35.8% +98.6% +8.8%
MSCI AC Asia Pacific Index GBP +20.3% +56.1% +122.1% +10.3%

**Strategy inception November 2009: EF Pacific & Emerging prior to January 2017, TM Cerno Pacific & Emerging thereafter

Fund Facts

Fund Size £57mn
Fund Launch Date 01/11/17
Legal Structure UK OEIC (UCITS)
Dealing Frequency Daily
Suitable for SIPPs/ISAs/JISAs Yes

Available Share Classes

Name Class A Class B
Cerno Capital AMC 0.65% 0.55%
Investment Minimums £5,000 £10mn

Risk Data

Net Equity Exposure*
Gross Equity Exposure*
Short Equity Exposure*
Long Equity Exposure*
Best Month*
Worst Month*
Sharpe Ratio
Calmar Ratio
Upside Capture*
Downside Capture*
Maximum Drawdown*
Annualised Volatility*
Beta (vs World Equity Index)*

Fund Codes

ISIN SEDOL Bloomberg
A Acc GB00BF00QK62 BF00QK6 TMCGLAA LN
A Inc GB00BF00QJ57 BF00QJ5 TMCGLAI LN
B Acc GB00BF00QM86 BF00QM8 TMCGLBA LN
B Inc GB00BF00QL79 BF00QL7 TMCGLBI LN

Fund & Risk Rating

ARC 2015 3D Awarded

DISCLAIMER

CERNO CAPITAL’s website contains certain information about its approach to providing investment management services but does not provide specific investment advice and is presented for informational purposes only. It does not represent that the services described on the site are suitable for any specific investor. You are advised not to rely on any information contained in this site in the process of making a fully informed investment decision. Instead, you are urged to base investment decisions upon a thorough investigation and to obtain all necessary professional advice.

The information provided on this website is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution, publication or use would be contrary to local law or regulation or in which CERNO CAPITAL does not hold any necessary registration or license. Individuals or legal entities in respect of whom such prohibitions apply, whether on grounds of their nationality, their place of residence or on other grounds, must not access or use this website.

 

DISCLAIMER

CERNO CAPITAL’s website contains certain information about its approach to providing investment management services but does not provide specific investment advice and is presented for informational purposes only. It does not represent that the services described on the site are suitable for any specific investor. You are advised not to rely on any information contained in this site in the process of making a fully informed investment decision. Instead, you are urged to base investment decisions upon a thorough investigation and to obtain all necessary professional advice.

The information provided on this website is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution, publication or use would be contrary to local law or regulation or in which CERNO CAPITAL does not hold any necessary registration or license. Individuals or legal entities in respect of whom such prohibitions apply, whether on grounds of their nationality, their place of residence or on other grounds, must not access or use this website.

Persons who wish to access this section of the website are required by CERNO CAPITAL to inform themselves of the legal or regulatory restrictions which may affect their eligibility to access the website or subscribe for units in the funds described herein.

The information on this website is only intended to be viewed by persons who fall outside the scope of laws that seek to regulate financial promotions in their country of residence. Examples of such persons may be governmental agencies, persons sufficiently experienced in investment business to appreciate the risks associated with investment services promoted on this site, large corporations and trusts and high net worth individuals. These examples are not country specific, may not be relevant to your country of residence and are provided for illustration purposes only. If you are uncertain about your position under the laws of your country of residence then you should seek clarification by obtaining legal advice from a lawyer practising in your country of residence before accessing our site.

In particular, CERNO CAPITAL is not registered as an investment adviser with the Securities and Exchange Commission and therefore this website is neither directed at nor intended for use by any person or entity in the United States.

Any past performance data contained on this website is no indication of future performance and nothing on this website should be interpreted to state or imply otherwise. The value of investments may fall as well as rise and investors may not get back the full amount invested. In addition, the information and materials herein shall not constitute an offer or solicitation, or an offer to sell, shares of any of the funds or any advisory or management service in any jurisdiction.

Additionally, the information on this website is provided “as is” and “as available”. CERNO CAPITAL is under no obligation to update the information to reflect changes after the publication date. It is presented without warranty of any kind, either express or implied, including without limitation of any warranties concerning the availability, reliability, accuracy, completeness, timeliness or sequencing of the site or the content, products or services available on or via the website. Also, the information offered does not carry a guarantee of accuracy, completeness or timeliness for any particular purpose and neither expressly or impliedly carries warranties or implied warranties regarding its merchantability and fitness for a particular purpose.

CERNO CAPITAL reserves the right to change the information displayed on the website or this legal notice at any time. They will not be responsible for any loss or damage that could result from interception by third parties of any information available on this website. In no event shall CERNO CAPITAL be liable for any indirect, incidental, special, punitive or consequential damages (including, without limitation, damages for loss of data, business or profits) arising out of or in connection with this legal notice, the website, the inability to use the site or any products, services or content purchased, obtained or stored in or from the site, whether based on contract, tort, strict liability or otherwise, even if CERNO CAPITAL has been advised of the possibility of such damages, and notwithstanding the failure of the essential purpose of any remedy without limiting the foregoing provisions of this paragraph, these limitations also apply to any third party claims against you.

This Legal Notice is governed by English Law and the English courts shall have exclusive jurisdiction over any matter arising out of this Legal Notice or from your accessing of the website. It is your responsibility to be aware of and to observe all applicable laws and regulations of any relevant jurisdiction.

The information contained herein does not constitute an offer to sell or the solicitation of any offer to buy or sell securities and or any derivatives and may not be reproduced, further distributed or published by any recipient without prior permission from CERNO CAPITAL.

This website has been published by CERNO CAPITAL which is authorised and regulated in the UK by the Financial Conduct Authority.

CERNO CAPITAL is a registered limited liability partnership in England and Wales (Incorporation Number OC326579), registered office: 34 Sackville Street, London, W1S 3ED.

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