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Fund commentary

Market Review
Corporate bond markets performed relatively well during December. Although there was still a lack of liquidity, which remains a concern, there were gains across most sectors, resulting in a narrowing of the spread in yields between government and corporate bonds.

Fund Performance
As the outlook for risk assets improved over the month credit spreads fell and the Fund produced a positive return as a result. Actions from the European Central Bank helped market sentiment and strong demand from investors boosted asset prices. The Fund's exposure to bonds issued by financial institutions boosted performance. We expect further volatility in 2012 but consider that the investment universe still offers attractive valuations to investors.

Fund Positioning
The market for new issues showed some improvement at the start of December. We participated in a new issue from supermarket group Morrison, picking up a relatively large allocation. We also participated a new euro issue by Repsol, the Spanish oil and gas company.


Roger Webb & Luke Hickmore
31 December 2011
Funds in focus



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Scottish Widows Investment Partnership Limited (SWIP) is registered in England and Wales, Company No. 794936. Registered Office is at 33 Old Broad Street, London EC2N 1HZ. Tel: 0131 655 8500. SWIP is authorised and regulated by the Financial Services Authority and is entered on their register under number 193707 (www.fsa.gov.uk).