MARKETalk

Welcome. The recovery in global activity has continued over the second quarter of 2010. This has been led by the strong performance of emerging market economies, with the output of advanced economies remaining relatively subdued.

One pressing issue among investors over the period was an aversion to risk. This loss of confidence was born of a culmination of factors, including fears over sovereign debt and worries over the ability of central governments to react appropriately to unfolding events.

In the UK, the general election produced a result which in itself was not unexpected; however, the government that emerged was altogether more inventive. George Osborne, the new chancellor of the exchequer, wasted little time in announcing his plans for tackling the UK's huge public-spending deficit. In this issue, we take a look at the main points of his emergency budget and assess the broader implications for the UK market.

And, with dramatic swings in bond prices making asset allocation increasingly difficult, we also investigate the growing popularity of strategic bond fund investment.

The second quarter brought good news from ratings agency Fitch. The SWIP Sterling Liquidity Fund and the Euro Liquidity Fund have both been classed as AAA, Fitch's highest money market rating. In addition, the Sterling Short Term Fund has been awarded a fund credit rating of AAA and a fund volatility rating of V1, which denotes very low market risk.

During these challenging times, these ratings are a testimony to the hard work and client focus of our investment teams.

Dean Buckley, Managing Director, SWIP

Investment markets and conditions can change rapidly and as such the views expressed should not be taken as statements of fact nor should reliance be placed on these views when making investment decisions. Past performance is not a guide to future performance. The value of investments can go down as well as up depending on investment performance. You may not get back the full amount originally invested.