Private Investment Office

Private Investment Office
CERNO CAPITAL is a private investment office
providing advisory and investment management
services to individuals, families, educational
endowments and charities.
We help our clients build multi-asset class portfolios
with the objective of compounding total returns over
time.
Our approach takes account of investment structure,
tax domicile, any special tax considerations and
requirement for income.
Client assets are held in global custodian banks,
benefitting from keenly negotiated tariffs for
administration, custody services and transactions, as
well as the security of third party reporting.
CERNO CAPITAL is independent of any commercial
or investment bank, fund management house or
brokerage. We invest at arm’s length and are not
compensated by the managers with whom we invest or
by intermediaries or consultants. We perform our own
research on candidate investments, with interviews
conducted by partners and dedicated research staff.
1
Investment Philosophy
We invest in long only funds, hedge funds, ETFs and
individual securities, and we pay performance fees only
when we deem them to be warranted.
Comprehensible
investment
strategies
We invest only in comprehensible investment strategies
and avoid high leverage. We take a real-world approach
to risk, concentrating on the risks of losing money, not
just the measurement of volatility. The assessment of
manager infrastructure and counterparty arrangements
form an important part of our investment decisions.
Investment Selection
It is our view that the only way to obtain a reliable
investment return is to identify the prevailing macroeconomic themes and then follow a robust methodology
for selecting investments.
Our office is staffed with well qualified professionals
who are able to assist clients in choosing the most
appropriate investments for their objectives.
For many of our clients this entails the construction
of reasonably concentrated portfolios (12-15 manager
positions typically) selected in accordance with a set of
macro beliefs and broad market views.
Once a client portfolio is established we, as investment
managers, need to understand all the generic and
specific risks contained within, deconstructing each
manager position so that we can gauge asset allocation,
currency weights, balance sheet exposure and volatility
characteristics.
2
A combination
of asset class
selection and
manager selection
Manager Assessment
We believe an active manager selection strategy is
required given the distribution of actively managed
returns in an asset class.
At weekly research meetings we discuss our list of
approved managers and the pipeline of prospective
managers. Before investment can take place, an internal
research report is commissioned, then presented to the
group. Approving a manager for investment requires
a unanimous vote from the Managing Partners. Our
Financial Controller, in charge of assessing operational
risk with managers, also possesses a veto.
Currently we have 80 approved funds on our list,
representing all geographies and asset classes.
3
Formal approval
process
Custody
We have negotiated custody arrangements with both
onshore and offshore institutions offering a range of
ancillary services as required.
For example, an investor who wishes to place funds in
one of our pooled investment schemes with no further
services can establish an execution only account.
For investors or families with more complex
arrangements we are able to establish custody
arrangements with full service investment banks but
at institutional tariffs. We have expertise in advising on
and establishing appropriate structures.
Partners
CERNO CAPITAL was founded by Nicholas Hornby and
James Spence who are Managing Partners of the firm
and jointly responsible for its day-to-day running. The
Managing Partners are assisted by two non-executive
partner bodies and an investment office, fully staffed
with dedicated investment research professionals,
financial and fund accountants, IT specialists and other
support staff.
The Investment Advisory Committee was convened
to provide contextual input on the factors affecting
financial asset prices.
The Advisory Board meets formally on a twice yearly
basis and is a consultative body providing advice on
business structure and strategy, market positioning and
referrals.
Please refer to the partners’ curricula vitae at the
conclusion of this document
4
Clients benefit from
negotiated tariffs
Institutional Advisory
In addition to working with private individuals
and families we provide investment advisory and
management services to UK charities, educational
endowments and smaller institutions. We work with
trustees, bursars, treasurers and their respective
committees helping them to manage long term
endowments and bequests.
We work with committees to understand their
investment objectives, income requirements, risk
tolerance and constraints. We design an investment
program to bridge from existing structures to target
allocations.
Once established, we monitor performance of selected
managers and conduct research into new candidate
managers for consideration. We create bespoke
benchmarks and performance reports for institutional
and charitable clients according to their specific needs.
For institutions without charitable status, we can
advise on efficient investment structures, propose
suitable counterparties and manage the process of
establishment or asset transfer.
5
Advisory services
for charitable
endowments
Establishing an account
At initial meetings with clients we discuss their
investment objectives, income requirements and tax
planning. Once the domicile, fiscal basis, risk profile and
reporting arrangements with the custodian bank have
been decided upon, we will propose a strategic asset
allocation and appropriate investment benchmark. All
of our clients maintain a principal relationship with the
Managing Partners of CERNO CAPITAL.
Example Portfolio Structure
Equity Long Short
13%
Cash Funds
1%
Gold Bullion
& Equities
6%
Equity Long
Only
46%
Global Macro
25%
Thematic
Single Equities
9%
Benchmark Weights (Medium Risk)
30%
25%
15%
10%
5%
5%
10%
100%
MSCI AC World Equity Index
HFRX Equity Hedge Index
Citigroup Broad Investment Grade Index
HFRX Macro Index
BarCap Global High Yield
Citigroup World Government Bond Index
GBP Cash
6
Managing Partners
Nicholas Hornby
Nicholas Hornby, co-founded Cerno Capital
Partners LLP and has over 20 years investment
experience. He was a director of the Geneva
based wealth management firm IWM
Independent Wealth Management S.A. (20052008) and established the London office. In
1995 he worked for Credit Lyonnais Securities
Asia (CLSA) in Equity Sales and later as Head of
Sales (2000-2005) where he was responsible for all institutional
client business in the UK. Prior to CLSA he worked in the Hong
Kong and Singapore offices of Cazenove & Co. During that time
he was responsible for equity research of Hong Kong and Chinese
equities and for the Singapore office. Nicholas graduated from
Bristol University with a BSc in Economics and Economic History
and is an Associate of the Chartered Institute for Securities &
Investment.
James Spence
James Spence co-founded Cerno Capital
Partners LLP. Prior to this he worked as
a partner of the London office of IWM
Independent Wealth Management LLP.
He worked for UBS as an Asian Equity
Strategist (2001-2004), HSBC as a Director of
Quantitative Research and Paribas as Head
of Indonesian Research and Head of Equities,
Singapore & Malaysia. He previously worked at WI Carr between
1991 and 1997 as a Hong Kong analyst and Head of Indonesian
Research. James graduated from St. Andrews University, Scotland
with an MA in Philosophy & Logic and qualified as a chartered
accountant in 1989, training with the London City office of
Coopers & Lybrand. James is a Member of the Chartered Institute
for Securities & Investment.
7
Investment Advisory Committee
Hugh Sloane
Hugh Sloane co-founded Sloane Robinson in 1993 and has been
the CEO and manager of the International & Japan portfolios
since the inception of the firm. Hugh began his investment
career at GT Management in Hong Kong in 1979. In 1991 he
moved to London as investment director of GT and chairman
of its European Investment Committee. Hugh left GT to found
Sloane Robinson where he is Chief Executive. Hugh sits on the
Investment Committee of Lincoln College, Oxford and The
Garrick Club. Hugh holds a degree in Economics and Politics from
Bristol University and an MPhil in Economics from Oxford.
Richard Oldfield
Richard Oldfield is chief executive of Oldfield Partners LLP, a
value-style asset management firm, which has US$3 billion under
management for families, trusts, charities and endowment funds.
He was previously chief executive and chief investment officer of
Alta Advisers Ltd., a European family investment office from 19972005. Until 1996 he was a director of Mercury Asset Management
plc, having joined the S.G.Warburg/Mercury group on leaving
Oxford University in 1977. He is chairman of the Oxford University
investment committee, a director of Witan Investment Trust plc,
and a trustee of Canterbury Cathedral Trust and of Royal Marsden
Cancer Charity. Richard holds a BA Hons in History from Oxford.
8
Investment Advisory Committee
- continued
Russell Napier
Russell Napier started his investment career with Baillie Gifford
in Edinburgh in 1989. Between 1995 and 1999 Russell was Asian
equity strategist for the Asian stockbrokers CLSA and continues
to consult for them. In 1999, Russell created and established a
course entitled A Practical History of Financial Markets which
forms part of the MBA programme at the Edinburgh Business
School. In 2006 Russell published “Anatomy of a Bear - Learning
From Wall Street’s Four Great Bottoms”, named as an Investment
Read of the Year by the FT. Russell is a non-executive director of
the Scottish Investment Trust and the Mid Wynd International
Trust and sits on the investment committee of the National Trust
for Scotland. Russell has an honours degree in law from Queen’s
University, Belfast and a masters degree in law from Magdalene
College, Cambridge.
Miles Geldard
Miles Geldard joined Jupiter Asset Manager in 2010 and currently
heads the Fixed Interest/Multi-Asset team and also manages the
Jupiter Global Convertibles SICAV, the Jupiter Strategic Total
Return SICAV and Jupiter Strategic Reserve Fund . Before joining
Jupiter, Miles was the Founder and Head of the Multi-Asset and
Convertibles teams at RWC Partners, and at JPMorgan Asset
Management, where he was CIO and Head of the Global MultiAsset Group and Global Strategy teams. Prior to this, Miles was
a Fund Manager at Jardine Fleming and an Adviser at the Central
Bank of Botswana. Miles gained a degree in Oriental Studies from
Oxford University and is a Chartered Financial Analyst (CFA).
9
Advisory Board
Sir Martin Smith
Sir Martin Smith co-founded the London based investment banking firm Phoenix Securities Limited in the early 1980’s. After the
sale of Phoenix in 1997 to Donaldson, Lufkin and Jenrette, he
became Chairman of DLJ’s European investment banking operations. In 2001 he assisted in the founding of New Star Asset Management, serving as its Deputy Chairman in the firm’s early years.
Sir Martin has a number of other business interests, including
advising Bain Capital, and chairing Finsbury Worldwide Pharmaceutical Investment Trust as well as GP Bullhound, a technologyfocused investment banking firm. Sir Martin has for many years
been actively involved in a range of arts and educational charities, including serving as Chairman of English National Opera,
Deputy Chairman of the South Bank Centre and the Science Museum. He is currently on the Boards of the Royal Academy of Music, Glyndebourne Opera House, and the Ashmolean Museum in
Oxford. His family have recently become the founding sponsors
of the Smith School of Enterprise and the Environment at Oxford
University. Sir Martin has an undergraduate degree in theoretical physics from Oxford, and masters degrees in Business and
Economics from Stanford University.
George Robinson
George Robinson co-founded Sloane Robinson in 1993 where he
is Head of Research and manager of the Phoenicia Fund. Prior
to that, having joined the Swire Group in Hong Kong, he was
seconded to Cathay Pacific Airways. In 1985 he joined WI Carr and
established an office in Seoul conducting research on the Korean
economy and companies listed on the Korean Stock Exchange. In
1988 he moved with WI Carr to Bangkok where he set up a similar
operation conducting research on companies listed on the Thai
Stock Exchange. In 1991 he moved to Hong Kong as director of
research, supervising research on listed companies in Hong Kong
and China. George sits on the investment committees of Eton
College and Keble College, Oxford. He graduated from Oxford
University in 1979 with an honours degree in Engineering Science.
10
Advisory Board - continued
John Booth
John Booth chairs Maintel Holdings plc, acts as a consultant to
Herald Ventures, a venture capital partnership, and serves as a
non-executive director for a number of private companies. In
1994 John co-founded Link Asset and Securities Co., a derivatives
brokerage firm and served as Chairman until its sale to ICAP in
2008. John began his financial career in 1983 at Merrill Lynch
in London and New York. He became a partner of Hutton
International Associates in 1986 and Senior Vice President of
Prudential Securities in 1988. John was appointed Managing
Director of Bankers Trust International plc in 1992. John is
a graduate of Oxford University and an Honorary Fellow of
Merton College and St Stephen’s House. He is a trustee of various
charities including the Chatsworth House Trust and established
his own charitable foundation in 2008.
Rupert Rittson-Thomas
Rupert Rittson-Thomas is an investor and director of several
start up companies including Lusight Research, an independent
investment firm focused on Global Emerging Markets, Go Native
Holdings, a provider of temporary homes for business travellers
in the UK, and Rapha Racing, a manufacturer of cycling clothing. Until the sale of Robert Fleming to Chase Manhattan Bank
in 2000, he was a Director of the Asian sales desk with Robert
Fleming in New York. Prior to this he was a member of the Asian
sales desk of Jardine Fleming Hong Kong (1995-1997) and equity
analyst of Hong Kong and Chinese companies (1991-1995). Rupert
commenced his business career at Save & Prosper in 1989 having
completed a short service commission in the Army.
Nicholas Morland
Nicholas Morland is a London based chartered accountant
involved in the management of a privately owned portfolio of
worldwide investments. Previous roles have concentrated on
general management, change management, new and existing
business planning and capital raising. He was CEO of MIM,
Group Underwriting Deputy with Alea, Portfolio Engineering
General Manager Europe with QBE and Group Operations
Director at Hiscox.
11
People
Mustafa Abbas
Prior to joining Cerno Capital, Mustafa
Abbas spent 20 years working in financial
firms, principally within the fixed income
asset class. His postings took him to London,
Frankfurt, New York and Singapore. In 1993
he joined Bankers Trust, subsequently part
of the Deutsche Bank group, where he was involved in a variety
of roles with emphasis on the debt instruments during the Latin
American, Asian and Russian crises. In 2000 he joined Dresdner
Kleinwort Investment Bank as head of local markets and most
recently worked at BNP Paribas. He has been engaged in both the
developed and developing markets and ran the emerging markets
business for Europe for DKIB. Mustafa is a graduate of Oxford
University where he read Philosophy, Politics, Economics and is an
Associate of the Chartered Institute for Securities & Investments.
Annushia Goede
Annushia Goede is responsible for the
information technology infrastructure and
maintenance and development of our internet
and intranet sites. Annushia has interned for
the e-Business team at Coca-Cola Enterprises,
maintaining and developing their intranet
site and has worked as IT support and Web Developer at an
NHS Dental Practice. Annushia graduated with a BSc (Hons) in
Computer Science from Brunel University and has a Diploma in
Web Development & Design from Qantm College.
Phillip Hyett
Phillip Hyett is the firm’s financial controller,
responsible for management and financial
accounting and regulatory liaison. In
addition he helps assess operational risks and
regulatory compliance issues, both at the client
portfolio and firm levels. Phillip has an MA in
Biological Sciences from Magdalen College, Oxford and an MSc
in Environmental Economics from Imperial College, London. He
is a qualified Chartered Accountant (ACA), and a member of the
Chartered Institute for Securities and Investment.
12
People - continued
Hashim Mustafa
Hashim Mustafa joined Cerno Capital as a
Fund Accountant. Hashim previously worked
for Saxon Capital, an algorithmic trading
company, as a Management Accountant and
before this he worked for two international
banks, Renaissance Capital and ICICI. Hashim
graduated with a BSc from University College London in 2006
in Geography and Economics, and is currently half way through
completing his ACCA.
Fay Ren
Fay Ren is a member of the investment
research department, with a particular focus
on asset class studies and all quantitative
aspects of investment returns. Fay recently
graduated with a MSc in Applied Mathematics
from Imperial College, London, and holds a
BSc (Hons) in Mathematics, also from Imperial College.
Fergus Shaw
Fergus Shaw joined as an Investment Analyst.
Prior to this, Fergus worked for Investec
Private Bank as a Manager Research Analyst.
He has 15 years of investment experience
and worked for Russell Investments as a
Portfolio Manager of UK equities (20012006) and Asian equities (2006-2009). He previously worked at
Valu-Trac Investment Management (1995-2001) covering global
equities and asset allocation. Fergus graduated from Edinburgh
University with a BCom (Hons), holds the CFA charter and is a
member of the CFA Society of the UK.
13
People - continued
Natalia Soldatova
Natalia Soldatova works on investment
research and manager selection. Before
joining Cerno Capital, Natalia spent one
year with Ermitage Group as a Quantitative
Analyst. Natalia holds a MSc in Banking and
International Finance and a BSc in Investment
and Financial Risk Management from Cass Business School of
City University. Natalia is an Associate of the Chartered Institute
for Securities & Investment.
Alethea Steven
Alethea Steven joined Cerno Capital in 2007
and is the Office Manager. She previously
worked at the Jersey Financial Services
Commission as an Assistant Enforcement
Manager. She has a BA in Ancient History
from Exeter University and a post-graduate
qualification from the Oxford School of Drama.
Jenny Zhu
Jenny Zhu is responsible for portfolio
valuation, fund accounting and all aspects of
client reporting. Previously, Jenny worked at
MGPA, a private equity investment advisory
company, as an investment accountant and
at PricewaterhouseCoopers in London. Jenny
holds an MA in Mathematics and Statistics from St. Hilda’s
College, Oxford. She is a qualified Chartered Accountant (ACCA)
and a Member of the Securities and Investment Institute.
14
Contact
Nicholas Hornby
Tel: +44 20 7382 4111
Fax: +44 20 7382 4122
Email: [email protected]
James Spence
Tel: +44 20 7382 4110
Fax: +44 20 7382 4122
Email: [email protected]
Mustafa Abbas
Tel: +44 20 7382 4112
Fax: +44 20 7382 4122
Email: [email protected]
15
cerno capital partners LLP
34 Sackville Street, London W1S 3ED
Tel: +44 (0)20 7382 4110 Fax: + 44 (0)20 7382 4122
www.cernocapital.com
This document is being issued by CERNO CAPTIAL PARTNERS LLP and is for private circulation only. CERNO CAPTIAL PARTNERS LLP is authorised and regulated by the Financial
Services Authority in the United Kingdom. The information contained in this document is strictly
confidential and does not constitute an offer to sell or the solicitation of any offer to buy any
securities and or derivatives and may not be reproduced, distributed or published by any
recipient for any purpose without the prior written consent of CERNO CAPITAL PARTNERS
LLP. The value of investments and any income generated may go down as well as up and is
not guaranteed. You may not get back the amount originally invested. Past performance is not
necessarily a guide to future performance. Changes in exchange rates may have an adverse
effect on the value, price or income of investments. There are also additional risks associated
with investments in emerging or developing markets. The information and opinions contained in this document are for background purposes only, and do not purport to be full or
complete. Nor does this document constitute investment advice. No representation, warranty,
or undertaking, express or limited, is given as to the accuracy or completeness of the information or opinions contained in this document by CERNO CAPITAL PARTNERS LLP, its partners
or employees and no liability is accepted by such persons for the accuracy or completeness of
any such information or opinions. As such, no reliance may be placed for any purpose on the
information and opinions contained in this document.
Cerno Capital Partners LLP is established as a limited liability partnership in England and Wales
under the number OC326579 and is authorised and regulated by the Financial Services Authority (Ref. no. 465408)
20