An Interim Investment Committee Meeting was held at the Clarion Offices on the 3rd September.
As there has been little change in the macro environment since the previous meeting, these minutes are a shorter missive than usual as we head into the Autumn.
Share prices have been remarkably resilient in the face of a fast approaching Brexit train crash, global trade wars, the softness of the London property market, the withdrawal of quantitative easing and discussions of interest rate normalisation.
Financial Markets seem content to focus on the continuing strong synchronised global growth and strong corporate earnings and improving profitability, particularly in the US where the economy is extremely buoyant. Corporate activity in the U.K. has also helped to support markets. The recently announced sale of the Costa Coffee chain by Whitbread PLC for £3.9 Billion to Coca Cola demonstrates the true entrepreneurial spirit of British Industry. Bought for a “mere” £19 million some 23 years ago when it had only 39 shops, this deal represents an increase in shareholder value of 2052 times.
It is exactly this sort of activity, aligned with improving corporate profitability, which delivers value for shareholders and drives stock markets higher.
It was also reassuring to note some recent comments by the Chinese Ambassador to the U.K., in which he stated that the U.K. is now China’s second largest source of investment. In the past five years China has invested more than £15 billion which is almost on a par with British investment in China. The Ambassador stated that one of the reasons for this investment flow is that the U.K. is one of the most attractive destinations in the world and its openness and cooperation deliver prosperity and benefits to the country and its people. Chinese Investment in the U.K. is set to continue, and expand, after Brexit because “the British Government will continue to foster a friendly and inclusive environment for foreign investors”.
As is often the case, and despite short term noise and adverse press comment suggesting otherwise, the Good News continues to outweigh the Bad News.
The Committee are pleased with the continuing strong performance of the Clarion Funds and Model Portfolios and feel the current investment strategy is just right in the current environment.
Indeed, it is particular pleasing to note that of the 50 different funds in the Clarion Portfoilio Funds and Model Portfolios, more than 85% are ranked 1st or 2nd quartile over 1 year. Whereas good fortune can sometimes play a part in fund selection, we feel this excellent result is a testament to the robust fund research, selection and ongoing review process used by Clarion.
No changes to the underlying investments are deemed necessary at this time.
A full review of investment strategy and the underlying holdings will take place at the next Investment Committee Meeting on 27th September.
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