The Clarion Investment Committee met on 22 October 2025. 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 October 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. We identify risks and opportunities that could affect your wealth in the years to come and build resilience into client portfolios.
Economic commentary & market outlook
The following is a summary of the major developments since the last Clarion Investment Diary.
Economics
- US president Donald Trump ended trade negotiations with Canada and added an additional 10% levy on Canadian exports to the US in response to the Canadian province of Ontario launching an advertising campaign that criticised trade tariffs
- The US and Australia signed an agreement to increase supplies of critical rare-earth minerals in a bid to counter China’s dominance in the industry. The agreement includes investment commitments worth $1 billion over the next six months
- Mr Trump also signalled the US’ commitment to delivering submarines to Australia under the AUKUS programme
- The US government-imposed sanctions on Rosneft and Lukoil, Russia’s two largest oil companies, as part of attempts to increase pressure on Russia to end the war in Ukraine. Chinese and Indian refineries paused orders of Russian oil following the announcement. The oil price rose by approximately $4 to $62 per barrel
- US inflation rose by less than expected, to 3% in the year to September, cementing investor expectations of two further interest rate cuts this year
- Activity in the US, UK, and euro area accelerated in October, according to initial estimates of surveys of purchasing managers
- The UK’s inflation rate remained unchanged at 3.8% in the year to September. The softer-than-expected inflation reading prompted a sharp fall in short-term UK bond yields
- The UK government borrowed £20.2 billion last month, the highest September reading for five years
- The cyber-attack at UK car manufacturer Jaguar Land Rover cost the UK economy £1.9 billion through production and supply chain disruption, according to the Cyber Monitoring Centre, making the attack the most damaging cyber event in UK history
- UK retail sales volumes unexpectedly increased by 0.5% in September compared with the previous month, driven by strong demand for computers and electronics and increased demand for gold from jewellers
- Euro area consumer confidence unexpectedly improved in October
- The Chinese government unveiled its 15th five-year economic plan, which included an increased focus on advanced manufacturing and developing a robust domestic market following subdued consumption in recent years
- The UK economy grew 0.1% in August, up from a revised 0.1% contraction in July
- The IMF upgraded the UK’s growth rate this year from 1.2% to 1.3%. However, it also warned that persistent above-target inflation risks becoming entrenched
- The UK unemployment rate increased in the three months to August, to a four-year high of 4.8%
- Graduate hiring in the UK fell for a second consecutive academic year, due to rising business costs and an uncertain economic outlook, according to the Institute of Student Employers
- German investor sentiment increased slightly in October, according to research institute ZEW, despite global uncertainties and a “lack of clarity” over the government’s investment plans
- The Italian government announced plans to increase the flat tax rate on overseas income of foreign residents by 50% to €300,000, amid a growing influx of wealthy individuals
- The US federal government shut down for the first time in seven years as Democrat and Republican lawmakers failed to reach an agreement on government funding. The Congressional Budget Office has estimated that the previous shutdown in 2018-19 resulted in a minimal economic impact. Trump has threatened to use this shutdown to permanently close agencies and “clear out dead wood, waste and fraud”
- Tesco CEO Ken Murphy said his “one ask” for the UK chancellor’s November budget was, “Don’t make it harder for the industry to deliver great value for customers… In the last budget, the industry and the sector incurred substantial additional operating costs. We’re doing our best to deal with them, but enough is enough.”
- The Bank of England’s Decision Makers Panel found that higher employer NICs have contributed to a weakening of businesses’ hiring intentions
- Euro area inflation increased to 2.2% in the year to September, up from 2% in August, while the unemployment rate increased marginally to 6.3% in August
- The OECD increased its forecast for global growth this year to 3.2%, only marginally below growth in 2024, commenting that “global growth was more resilient than anticipated in the first half of 2025”
- The US economy grew faster than previously estimated in the second quarter, pointing to greater resilience in the US economy
- A group of 101 UK Labour Party MPs urged the government to raise taxes on gambling companies to fund the removal of the two-child benefit cap
- The Resolution Foundation think tank said that the UK government should break its election promise by raising income tax in the upcoming Autumn Budget by 2%, while also cutting national insurance contributions, as part of measures to fund an expected shortfall in the public finances
- Think tank New Financial suggested that the UK government could force pension funds to invest 20%-25% equity holdings in the UK, resulting in more than £75 billion of additional investment into UK equities by 2030
- The UK’s population increased by 755,000 between mid-2023 and mid-2024, the second fastest rate in 75 years, driven by immigration
- Growth in euro area activity reached a 16-month high in September, according to initial surveys of purchasing managers, driven by increasing output in Germany
Business
- US tech company Anthropic, which created the Claude AI chatbot, announced a deal to access 1 million Google Cloud chips to train its future AI models
- The UK’s Competition Appeal Tribunal ruled that US tech giant Apple abused its dominant market position to charge developers “excessive and unfair” commissions on App Store purchases. Apple said it would appeal the decision
- The European Commission said that media companies Meta and TikTok breached their obligations to give researchers adequate access to public data under the Digital Services Act
- The number of criminals using AI to commit fraud attacks on UK victims has increased by 17% so far this year to a record high, according to banking trade body UK Finance
- European defence companies Airbus, Leonardo and Thales signed a memorandum of understanding to create a new European space entity, in a bid to compete against US aerospace company SpaceX
- Eurostar said it will order up to 50 double-decker trains and upgrade its London depot as part of plans to increase passenger numbers through the Channel Tunnel
- UK manufacturer JCB announced a £100 million investment in the UK
- UK transport secretary Heidi Alexander launched a fast-track process for Heathrow’s third runway as part of efforts to speed up the planning process and get construction underway
- In a blow to the UK equity market, pharmaceutical company AstraZeneca announced plans to elevate its listing in New York, as it seeks to attract US and global investors. The FT reports government estimates that show the move will cost the exchequer up to £200 million a year in lost stamp duty on share trading
- Energy producer Diversified Energy announced plans to switch its primary listing from London to New York
- The UK government is expected to give a stamp duty holiday on shares of newly UK-listed companies amid rising concerns over the international competitiveness of the London Stock Exchange
- Global Tesla sales rose to a record high in the third quarter this year, as US consumers rushed to take advantage of tax credits on electric vehicles before their September expiry deadline
- The UK High Court approved US food delivery company DoorDash’s £2.9 billion acquisition of UK rival Deliveroo
- The UK government approved a £1.5 billion loan guarantee for Jaguar Land Rover following a cyber-attack that halted production
- The Bank of England announced reforms to loosen bonus rules for the UK financial sector in a bid to ease compliance costs and increase UK competitiveness
- Australian investment group Macquarie bought an additional 50% stake in London City Airport as part of its £20 billion UK investment plan
- Food manufacturer Nestlé announced plans to cut 16,000 jobs globally as part of a cost-saving drive
- Shares in Danish pharmaceutical company Novo Nordisk fell following Mr Trump’s pledge to lower the company’s Ozempic weight loss drug from the current price of $499 to as low as $150, as part of a wider drive to lower drug prices for US consumers
- Luxury carmaker Ferrari said it reduced the supply of cars to the UK to retain their residual selling price amid the departure of wealthy individuals over tax changes, including the abolition of the non-dom status
- Apple signed a $700 million deal to stream Formula 1 races in the US, becoming the latest tech player to venture into the live sport streaming industry
- US chip manufacturer Nvidia plans to invest $100 billion in AI tech company OpenAI, as part of joint plans to build AI data centres
- CEO of pharmaceutical company Eli Lilly, Dave Ricks, said the UK was “probably the worst country in Europe” for drug prices, following recent disputes between the government and drugmakers over pricing
- The UK government approved £2.2 billion plans to build a second runway at Gatwick Airport
- Fintech company Revolut pledged to invest £3 billion in the UK as part of plans to become a fully licenced lender in the UK and expand into 30 new countries by 2030
- Investment company Petershill Partners is the latest company to delist from the London Stock Exchange
Global & political developments
- US vice president JD Vance called the vote by Israel’s parliament to annex the occupied West Bank a “very stupid political stunt”, as debates about the future of the Palestinian territory intensify
- The UN’s International Court of Justice said that Israel must allow UN agencies to provide humanitarian assistance in Gaza
- The US Air Force flew B-1 bombers near Venezuelan airspace last week as part of increased pressure by the Trump administration against drug cartels in the country
- EU leaders failed to agree on a proposed €140 billion loan to Ukraine using frozen Russian assets due to technical issues. The matter will be revisited again in December’s meeting of EU leaders
- Trump pardoned Changpeng Zhao, co-founder of crypto exchange Binance, who previously pleaded guilty to money laundering violations. The Trump administration has focused on making the US the world leader of the cryptocurrency industry
- Catherine Connolly, a left-wing independent legislator, was declared Ireland’s president after a landslide victory
- The UK Labour Party lost a by-election in the traditional Welsh stronghold of Caerphilly to the nationalist Plaid Cymru party. The Labour Party won just 11% of the vote share, compared with 47% for the winning Plaid Cymru candidate
- The British Medical Association announced that resident (formerly called junior) NHS doctors in England will go on strike on 14 November for five days over pay
- Israel’s military said it killed Houthi military chief of staff Mohammed Abdulkarim in a missile strike in Yemen
- During a meeting with Mr Trump, Ukrainian president Volodymyr Zelenskyy offered to provide drones to the US in exchange for long-range Tomahawk missiles. However, a deal has not yet been reached
- The US and Saudi Arabia are discussing a defence pact, similar to the US-Qatar pact agreed last month that sees any attack on the Gulf state as a threat to the US’ peace and security, the FT reports
- Mr Trump confirmed that he had authorised the CIA to conduct covert operations in Venezuela, and threatened missile strikes on the country as part of plans to tackle drug trafficking
- Mr Trump said Indian prime minister Narendra Modi pledged India would stop buying Russian oil. India’s foreign ministry said discussions are ongoing regarding US-India energy cooperation
- French prime minister Sébastien Lecornu survived a no-confidence vote, following a decision to suspend President Emmanuel Macron’s planned pension reforms to increase the state pension age to 64
- China’s foreign ministry warned of “consequences” for the UK after it delayed approval of China’s planning application for a new embassy
- UK prosecutors dropped charges against two British men accused of spying for China, sparking a political row over how and why the case collapsed
- UK home secretary Shabana Mahmood said that the UK’s “failure to bring order to our borders is eroding trust”, ahead of a meeting of European leaders to discuss rising migration
- In a sign that President Trump may be losing patience with Russia, the US announced that it will share intelligence with Ukraine to support its long-range missile strikes on Russia’s energy infrastructure
- Danish prime minister Mette Frederiksen said Russia’s hybrid war was “only the beginning” as European leaders met in Denmark to discuss European security and support for Ukraine
- Conservative Party leader Kemi Badenoch pledged to scrap the UK’s Climate Change Act. Former UK prime minister Theresa May said the decision would be a “catastrophic mistake”
- France joined the UK, Australia, Canada, and Portugal in formally recognising a Palestinian state
- Former French president Nicolas Sarkozy was jailed for five years for criminal conspiracy related to illicit funding from former Libyan leader Muammar Gaddafi
- The UK government announced plans to issue all adults a digital ID card as part of plans to tackle irregular migration and illegal working
- Manchester mayor Andy Burnham said Downing Street was creating a “climate of fear” and that some Labour MPs are urging him to challenge the leadership of UK prime minister Keir Starmer
Strategy
- 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.
- No changes to the underlying funds were considered necessary as all funds are performing in line with expectations and within their risk-reward parameters, although the IC noted that the Schroder Institutional Pacific and the Baillie Gifford Pacific Funds were slightly underperforming the sector average over shorter time periods. It is not unusual for performance over shorter time periods to be volatile, but it was resolved to obtain further analysis from Margetts to see if there were any reasons for concern. The findings will be discussed at a future IC meeting.
- Despite ongoing geopolitical tensions, we are cautiously optimistic about stock markets in 2025 and 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 Funds
Prudence Portfolio 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
October 2025
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.
