Emerging Markets Secure Bond

Performance Update: 1 October 2011 to 31 December 2011

Performance Commentary

The fourth quarter of 2011 was a positive period for the underlying investment strategy as markets were volatile but ended in positive territory.  The MSCI World index (in dollar terms) of shares, the primary benchmark for investment portfolios, rose 7.11% but finished the year down -7.62%. Performance in world stock markets was mixed with the Japanese NIKKEI 225 losing -2.82%. Volatility (as measured by the VIX index) started the quarter at a very high level of 42.96% and remained high until December. In December it decreased significantly and finished at 23.40%. Of the four underlying stock markets, China (up 11.43%) and Brazil (up 8.47%) had the biggest increases. India's stock market lost -6.45% over the quarter. Growth concerns in the emerging economies, particularly China continued in the quarter. Chinese CPI inflation has moderated from its peak of 6.5% year on year in July to 5.5% in October thanks to the tightening of monetary policy. Food prices remain the main driver of CPI inflation, contributing the most of the rise in the CPI. However inflation concerns are mitigated by slowing growth in the global economy. Renewed weakness in the European economies has probably accelerated China's move to slower growth but GDP growth remains strong at around 9%.

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For further information please contact Paddy Swan (pswan@invesco.ie) or James Finucane (jfinucane@invesco.ie).