The Clarion Investment Committee met on 23 February 2026. The following notes summarise the main points of consideration in the Investment Committee discussions but have been updated to include commentary on recent events and the wider implications for financial markets.
Please click here to access our February Stock Market & Economic Commentary written by Clarion Group Chairman, Keith Thompson.
The Clarion approach to investment management
Our investment philosophy is guided by proven financial research, applied with care by our in-house Investment Committee. We do not chase trends or make predictions. Instead, we rely on evidence, structure, and oversight to manage wealth responsibly over the long term.
We focus on what can be controlled: diversification, discipline, and costs. This allows us to create efficient portfolios designed to weather uncertainty and deliver the returns that markets provide.
Our approach is built on five enduring principles, which together form the foundation of our Investment Philosophy.
Each of the five philosophy pillars reflects our commitment to managing your wealth with clarity, discipline, and care.
1) Evidence-based investing. Disciplined diversified portfolios deliver better long-term outcomes than chasing the latest market trend.
2) A systematic process. A structured repeatable process designed to remove guesswork and emotion.
3) Cost efficiency. We carefully select cost-effective investment solutions without compromising quality.
4) Independent oversight. Every decision is reviewed and challenged by our in-house Investment Committee, supported by Margetts Fund Management and Dynamic Planner.
5) A responsible perspective. Identifying risks and opportunities that could affect your wealth in the years to come and building resilience into client portfolios.
Economic commentary & market outlook
The following is a summary of the major events and economic news since the last Clarion Investment Diary.
Economics
- The US Supreme Court ruled that US import tariffs imposed by US president Donald Trump are illegal. Mr Trump subsequently announced an increase of the US global import tariff rate from 10% to 15%
- US economic growth slowed in the fourth quarter of last year to 0.4%, down from 1.1% in the third quarter, due to lower government spending caused by the federal government shutdown
- The US personal consumption expenditure price index, the Fed’s preferred inflation measure, increased 2.9% in the year to December, the highest level since March 2024
- UK and EU activity accelerated in February but unexpectedly eased in the US, according to initial estimates from surveys of purchasing managers
- UK unemployment increased to 5.2% in the three months to December 2025, a five-year high, while annual wage growth slowed to 4.2%. Investors subsequently increased their expectations of the Bank of England cutting interest rates next month
- The UK’s inflation rate fell sharply to 3% in the year to January, due to easing food and transport prices
- The UK government should replace its fiscal rules with “fiscal traffic lights”, which measure broader objectives than current budget headroom and debt levels, to improve policymaking, according to the Institute for Fiscal Studies think-tank
- The UK reached a high-level agreement with California to increase technology sharing and investment in clean power
- UK investors warned the government that loosening public borrowing limits to fund UK prime minister Keir Starmer’s recent calls to accelerate the pace of military spending would risk rising public borrowing costs
- German economic sentiment marginally softened in February from its recent high, as the economy enters a “fragile” recovery, according to research institute ZEW
- The International Monetary Fund urged China to cut its state support for key industries as they are “giving rise to international spillovers and pressures”
- US equity indices have been falling throughout the month, led by tech stocks amid concerns over the returns from significant AI investment this year. The tech-heavy Nasdaq is down circa 3% since the start of the year.
- The US economy added a greater-than-expected 130,000 jobs in January and the unemployment rate improved marginally to 4.3%, signalling a stronger labour market than recent unofficial reports indicated
- US consumer price inflation softened more than expected to 2.4% in the year to January
- The UK economy grew by a less-than-expected 0.1% in the final quarter of 2025, resulting in annual growth of 1.3% last year. Growth in the final quarter was driven by manufacturing, while the service sector showed no growth
- A record 19% of people in the UK believe taxes and government spending should be reduced, more than three times the previous record high of 6%, according to the National Centre for Social Research
- The UK recorded a record trade deficit in goods last year, while also recording a record surplus in services, highlighting the economy’s long-term shift away from manufacturing
- UK electricity prices in 2030 will be higher than their recent peak caused by Russia’s invasion of Ukraine due to the significant investment needed to upgrade the UK’s energy system, according to energy company Centrica
- The euro area economy increased by 0.3% in the final quarter of last year, in line with expectations
- Japanese equities increased to a record high following Sanae Takaichi’s landslide election victory. Yields on long-term government bonds also rose due to expectations of Ms Takaichi’s fiscal stimulus plans
- The US Federal Reserve held interest rates at 3.5%–3.75%, noting the “solid pace” of economic activity and unemployment showing “some signs of stabilisation”
- Gold surpassed $5,000 per troy ounce for the first time amid continuing political uncertainty
- US president Donald Trump said he will nominate former Fed governor Kevin Warsh as the new chair of the Fed. If approved, Warsh will replace current chair Jay Powell, who has been frequently criticised by the Trump administration for not lowering interest rates sooner. The US dollar rose, and the gold price fell following the news, partially reversing the trends seen earlier in the week
- US consumer confidence fell sharply in January to its lowest level since 2014, according to preliminary results from The Conference Board, amid concerns about inflation and the labour market
- UK vehicle production fell last year to its lowest level since 1952, according to the Society of Motor Manufacturers and Traders (SMMT), driven by a fall in exports and a cyber-attack on Jaguar Land Rover that halted production. The SMMT is encouraging suppliers to diversify into the defence industry
- The UK and EU would suffer more than the US if they implemented retaliatory trade tariffs, according to researchers at Aston University
- Russian income from selling oil fell by about one-fifth last year compared with 2024 due to low oil prices and greater discounts being offered on Russian oil in response to US sanctions, the FT reports
Business
- Mining company Anglo American announced a $2.3 billion impairment charge of its diamond business De Beers amid a market slump for precious stones
- Defence company BAE announced record sales due to increased European military spending
- The UK government announced plans to compel technology companies to remove abusive images from the internet within 48 hours, or face fines or have their services blocked
- UK banks discussed the creation of a national payment system to reduce reliance on US-based networks Visa and Mastercard, which currently process up to 95% of all UK card transactions
- University College London agreed to pay former university students £21 million to settle a lawsuit over claims of diminished university education during the COVID pandemic, the FT reports
- Carmaker Stellantis resumed sales of diesel cars in the UK as it pares back its plans for its transition to electric vehicles (EVs) due to lower than expected consumer demand
- The EU is proposing that 70% of EV components originate from the EU for EV manufacturers to qualify for the bloc’s subsidy scheme, with the aim of protecting EU industries from Chinese competition
- European aerospace company Airbus reduced its production plans for its best-selling model due to supplier delays for its engines
- Japan announced three new industrial projects in the US, including a natural gas power plant, as part of its $550 billion investment commitment agreed last year under trade negotiations to lower US import tariffs
- US driverless car firm Waymo said it hopes to begin rolling out a robotaxi service across London later this year, following a planned pilot service in April
- Annual revenues of US car manufacturer Tesla fell for the first time last year amid increased competition from Chinese rivals. Tesla announced plans to scrap two of its car models and invest more in AI as part of a broader shift into the robotics and AI sector
- Solar panel companies are looking for alternatives to using silver in their products due to a supply chain shortage caused by rapidly rising silver prices
- US tech company OpenAI is in discussions with NVIDIA, Microsoft and Amazon, who currently provide the infrastructure for OpenAI’s AI models, to raise $40 billion to continue the company’s rapid expansion, the FT reports
- Apple bought Israeli tech company Q.AI for $2 billion as part of its development of AI-capable devices
- Pubs across England and Wales will receive a 15% reduction in business rates after many pub landlords campaigned for rate relief by banning Labour MPs from their pubs
- The UK government announced that ground rent paid by leaseholders would be capped at £250 a year per property. The government also proposed to ban the sale of new leasehold flats
- UK asset manager Schroders agreed a £9.9 billion takeover deal from US rival Nuveen
- The UK’s Ministry of Defence agreed a partnership with the Department for Work and Pensions for military recruiters to provide advice in local job centres in a bid to boost recruitment to the UK’s armed forces
- UK-based AI company Olix has raised £250 million to build AI chips that aim to be faster and cheaper than those of US tech-giant NVIDIA
- French airline company Air France-KLM said that it may need to halve the number of flights to Asia due to a “competitive disadvantage” stemming from the EU’s climate policies
- Drinks brewer Heineken announced plans to cut 6,000 jobs as beer demand continues to decline
Global & political developments
- Ukrainian president Volodymyr Zelenskyy said there is progress on negotiations with Russia regarding the monitoring of a future ceasefire. However, other political issues remain unresolved
- US president Donald Trump said that Iran has a “maximum” of 15 days to reach a deal with the US over its nuclear programme, or “bad things will happen”. The US has built up an increasing military presence across the region. Oil prices reached a six-month high amid the tensions
- Mr Trump renewed his criticism of the UK handing over sovereignty of the Chagos Islands to Mauritius, following the UK government’s reservations about allowing the US to use UK military bases for potential strikes on Iran
- Israel said Hamas has 60 days to disarm or face fresh military operations in Gaza
- European Central Bank president Christine Lagarde is expected to leave her post before her eight-year term expires in October 2027 to enable French president Emmanuel Macron and German chancellor Friedrich Merz to find a new leader ahead of the French general elections next year, the FT reports
- The UK government cancelled plans to delay 30 local council elections after receiving legal advice. The Reform UK political party had launched legal action against the original decision to delay the elections
- Antonia Romeo was appointed the UK’s first female cabinet secretary following the departure of Chris Wormald
- The Trump administration also indicated that US security guarantees are dependent on Ukraine agreeing to a peace deal, which would involve it ceding territory to Russia, the FT reports
- Mr Trump threatened to “de-certify” Canadian-made jets in the US and impose 50% tariffs on all Canadian-made aircraft after claiming that Canada refused to certify a series of US-made jets
- UK prime minister Keir Starmer said he wants the UK to have a “more sophisticated” relationship with China during his recent visit. China said it will lift travel bans on UK MPs and peers who criticised the country’s human rights record, and agreed a border security deal with the UK to tackle Chinese-made engines being used by smuggling gangs to cross the English Channel
- Mr Trump warned that it was “very dangerous” for the UK to forge close business links with China
- United Nations general secretary António Guterres said the international organisation was at risk of “imminent financial collapse” because of member states not paying fees
- Denmark’s prime minister, Mette Frederiksen, warned that Europe needs an “emergency mindset” on deterrence and defence if it is to survive a global disorder
- German chancellor Friedrich Merz held talks with French president Emmanuel Macron on whether Germany might join France’s nuclear umbrella
- Ukraine is planning presidential elections as well as holding a referendum on any peace deal with Russia, the FT reports, following US pressure to end the war by the summer
- Russian casualties in Ukraine have risen sharply in recent weeks, according to European and Ukrainian officials, increasing the difficulty of maintaining offensive operations and recruiting new soldiers
- Iran’s president Masoud Pezeshkiansaid the country will open up its nuclear sites for verification to prove it is not building nuclear weapons
- Cuba said it has run out of jet fuel after the US government cut off oil supplies from Venezuela to the island. Some airlines have suspended flights to the island
- The UK government is introducing a bill to prevent companies that are foreign-owned or not headquartered in the UK from donating to political parties. The bill will also lower the UK voting age in national elections to 16
- UK prime minister Keir Starmer called for a multilateral defence initiative at the Munich Security Conference, which aims to reduce the cost of Europe’s rearmament
- Mr Starmer’s chief of staff Morgan McSweeney resigned following increased scrutiny over Mr Starmer’s appointment of Peter Mandelson as ambassador to the US. Director of communications Tim Allen also resigned
Strategy & summary
- The bond allocations within the portfolios target short and mid sections of the yield curve where capital appreciation is expected.
- Index-linked bonds are also included in the bond allocations as a hedge against persistent inflation.
- High-yield bond strategies are avoided as credit spreads do not currently offer a worthwhile risk premium.
- The US equity market is underweighted on a valuation basis and strategies within the portfolio are particularly underweight mega-cap stocks.
- The UK equity market is conversely overweighted on a valuation basis.
- Asia, Emerging Markets and China are also overweighted as they trade below their long-term historical average. The IC believe these regions have the potential to grow their valuations in the long-term from a low base.
- UK and US small and mid-cap equity allocations are also included based on an attractive entry point, which current valuations provide.
- The performance of all funds was compared against their IA sector benchmarks, observing that most have performed well, particularly Dimensional European Value and Invesco Emerging Markets both of which have significantly outperformed.
- No changes to the underlying funds were considered necessary at this stage, as all funds are performing in line with expectations and within their risk-reward parameters. The Legal and General Infrastructure fund was discussed in detail because of its high US weighting. Exposure to this fund may be reduced at the next meeting in favour of the Clearbridge and/or the BNY Mellon Infrastructure funds, which have a higher weighting to Europe. The iShares US Tips fund was also reviewed and as inflation in the US is now showing signs of moderating, consideration will be given to switching this allocation to the Dimensional Sterling Short Dated Bond fund.
- Despite ongoing geopolitical tensions, concerns about the state of the global economy, the extent of government spending and debt, over-regulation and high taxation, and more volatile and higher inflation, we are cautiously optimistic about stock markets in 2026. The level of market concentration courtesy of the US Mag 7 tech stocks poses increased risk and draws the oxygen out of the room regarding the attractions of other markets, but the sands of sentiment appear to be shifting, and the Clarion Portfolio Funds are positioned accordingly.
- The investment committee see valuation opportunities in the US beyond the big tech stocks and in markets outside the US, particularly the UK, Europe, Asia, and Emerging Markets, where valuations are generally more attractive, which will help to offset some of the economic headwinds and geopolitical uncertainty.
Clarion Portfolio Funds
Prudence Fund
The chart below shows the historical performance of the Prudence Portfolio against a relevant benchmark since the start of the available data.
Changes to the Prudence Fund
Navigator Fund
The chart below shows the historical performance of the Navigator Portfolio against a relevant benchmark since the start of the available data.
Changes to the Navigator Fund
Meridian Fund
The chart below shows the historical performance of the Meridian Portfolio against a relevant benchmark since the start of the available data.
Changes to the Meridian Fund
Explorer Fund
The chart below shows the historical performance of the Explorer Portfolio against a relevant benchmark since the start of the available data.
Changes to the Explorer Fund
Holding a globally diversified portfolio of high-quality assets is important to provide resilience and grow the value of savings over the long term and remains the appropriate method for allocation of investor capital. Cash is unattractive as inflationary pressures, although moderating, look to be structurally long term.
Keith W Thompson
Clarion Group Chairman
February 2026
Risk Warnings
Any investment performance figures referred to relate to past performance which is not a reliable indicator of future results and should not be the sole factor of consideration when selecting a product or strategy. The value of investments, and the income arising from them, can go down as well as up and is not guaranteed, which means that you may not get back what you invested. Unless indicated otherwise, performance figures are stated in British Pounds. Where performance figures are stated in other currencies, changes in exchange rates may also cause an investment to fluctuate in value.
The content of this article does not constitute financial advice and you may wish to seek professional advice based on your individual circumstances before making any financial decisions.
