Minutes of the Clarion Investment Committee held 1pm on 16th January 2020 at Overbank, 52 London Road, Alderley Edge, Cheshire.

Keith Thompson (KT) Chair/Director
Dmitry Konev (DK) Analyst (Margetts Fund Management)
Toby Ricketts (TR) Fund Manager (Margetts Fund Management)
Sam Petts (SP) Financial Planner (Clarion Wealth Planning)
Adam Wareing (AW) Director of Operations (Clarion Wealth Planning)
Jacob Hartley (JH) Financial Planner (Clarion Wealth Planning)


Review of previous minutes and action points

Minutes from the previous meeting held on 11th December 2019 were agreed by the Committee as a true and accurate record.

Market Commentary and Economic Outlook.

Bearing in mind that this meeting was held the day before the UK General Election, the key elements discussed were as follows:


  • Please click here to access our January Commentary and the Investment Committee’s current macro-economic thoughts and investment themes for the year ahead.
  • The Committee are of the opinion that for the year ahead we are very likely to have more of the same. The new year is born in the policy constraints and decisions of the old, so we expect a continuation of low growth, low inflation, low unemployment, low interest rates and accommodative monetary policies from central banks which will provide support to financial markets.
  • In recent months our overweight position to UK equity funds has served client portfolios well, as covered in more detail below under the section headed Management of the Clarion Funds.
  • In the January Commentary, as in previous commentaries, we frequently refer to stock markets but, of course, Clarion do not invest in stock markets. We invest in a broad range of different assets and, importantly, we invest in a portfolio of fund managers and funds which are thoroughly researched and robustly monitored by our Investment Committee to ensure they are appropriate for inclusion in the Clarion Portfolio Funds and Model Portfolios. Our objective is to select the best fund managers and funds for each asset class and geographical region, and which complement our broader macroeconomic themes and risk parameters. Investment diversification and liquidity is also a key consideration in our fund selection process.
  • The following comments from one of our Fund Managers will undoubtedly be of interest to our clients; “We continue to invest in businesses whose earnings and cash flows, we believe, will grow 1) significantly over time, 2) largely irrespective of the economic environment and 3) to an extent that is underappreciated by the market. While markets may remain volatile in the short term, we remain optimistic about the pipeline of investment opportunities and future growth”.
  • It is appropriate to include a post meeting comment on the CoronaVirus in China. Like all our readers we care about this most as human beings, rather than as financial advisers and investment commentators. The prospect of a deadly epidemic is truly horrific and we must hope and pray that the virus can be contained and defeated before many more deaths are confirmed. Stock market volatility is inevitable as investors become concerned that the virus will hit growth in China and could spread to Hong Kong and further afield. Investors worry that consumer confidence and tourism will be negatively impacted but viewed dispassionately, historical experience suggests that the negative impact on economic growth and asset prices from viral outbreaks such as the CoronaVirus, and SARS and Ebola before that, typically normalises within a few months.

Review Risk Management, Eligibility and Investment and Borrowing Powers

The Committee reviewed risk reports and confirmed that all Clarion funds have been run in line with expectations. The Committee confirmed that there have been no breaches recorded for any of the funds included in the Clarion range.

Management of the Clarion Funds

MGTS Clarion Prudence

Prudence has benefited from an active allocation to global equity funds and a strong selection of UK strategies. Although short-dated bond funds detracted from the portfolio’s return over 12 months as long-dated bonds outperformed, Prudence outperformed the IA Mixed Investment 20-60% Shares sector by c.1.7 percentage points and ended 2019 in the second quartile.

There has been a swing in the relative performance profiles of the Fundsmith Equity and M&G Global Dividends strategies over 12 weeks. While the more growth biased Fundsmith strategy outperformed over 12 months, the more value-oriented M&G fund was ahead over 12 weeks, highlighting the short-term rotation from growth stocks to value.

The Committee were pleased with the underlying selection of UK funds, as 4 out of 6 were ahead of the IA UK Equity Income sector over 12 weeks. The Man GLG UK Income strategy was the best performing fund over 12 weeks, due to its mid-cap bias, which has benefited from the appreciation of Sterling.

Overall, the Committee are happy with the performance of the Prudence fund and no changes have been proposed.

The Committee approved the strategy and confirmed it is in line with the mandate.

MGTS Clarion Meridian

Meridian has benefited from an overweight allocation to the UK, Asia Pacific and Global funds. The preference for short-dated bonds rather than long term, detracted from performance over 12 months. Overall the fund has outperformed the IA Mixed Investment 40-85% Shares sector by c.0.6 percentage points over 12 weeks.

The CFP SDL UK Buffettology fund was the best performing underlying holding over 12 weeks with c.10.5% return in absolute terms. This was followed closely by the SVM UK Growth strategy with c.8.5% return over the same period.

The Committee noted the weaker performance profiles of the Artemis Income and Rathbone Income strategies, which have underperformed the IA UK Equity Income sector over 12 weeks but outperformed over 1 and 2 weeks.

The Committee were pleased with fund selection in Asia and Europe, where all funds outperformed their respective sectors over 12 weeks. The underlying selection of all funds looked strong over 12 months but weakened slightly towards the end of the year.

Overall the Committee are happy with the performance of the Clarion Meridian fund and no changes have been proposed.

The Committee approved the strategy and confirmed it is in line with the mandate.

MGTS Clarion Explorer

The underlying fund selection in Explorer was the major contributor to the fund’s outperformance over both one year and 12 weeks. The underweight allocation to the US was the biggest detractor from relative returns over one year. Overall the fund was c.2.3 percentage points ahead of the IA Flexible Investment sector over 12 months and c.1.1 percentage points ahead over 12 weeks.

The Committee commented on the exceptional selection of the underlying Emerging Markets, Japanese and European funds, as all outperformed their respective sectors over 12 weeks. The UBS Global Emerging Markets Equity fund was the strongest performer over the period with c.10.7% return in absolute terms.

While positive in absolute terms, 3 out of 5 underlying Asia Pacific funds slightly underperformed the IA Asia Pacific ex Japan sector over 12 weeks. This was mainly due to underweight allocations to China within these portfolios, which has outperformed over the last three months.

The Committee are pleased with the overall performance of this strategy and no changes have been proposed.

The Committee approved the strategy and confirmed it is in line with the mandate.

Model Portfolios

No changes.


The Committee discussed and agreed new asset allocations for Clarion funds and Clarion models which will be implemented in the new year. AW and DK will work on the implementation of new strategies in January.

Action Points

The Committee discussed a potential new fee structure. Clarion would like to bring the cost of the Clarion Portfolio funds in line with the cost of holding Clarion models on platforms. AW will send a breakdown of platform costs to Margetts and TR will consider a proposal which will be discussed at the next meeting.

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