Investment Update. 1 July Highlights Trade tensions continue. US central bank raises interest rates

Transcription

1 Investment Update 1 July 2018 Highlights Trade tensions continue US central bank raises interest rates ECB announces end to quantitative easing in eurozone

2 World Markets Update United Kingdom Having reached record highs in May, shares in large UK companies fell slightly in June. Sterling also dropped, particularly against the US dollar, which was beneficial for companies with significant export and foreign trading interests. The oil price remained high, which meant shares in UK oil & gas producers were up over the month. Utilities companies also performed well, but basic materials and financials lagged behind other sectors. Economic data was mixed. The Office for National Statistics said that the UK economy expanded a little more quickly than it previously thought in the first quarter of the year. The final estimate for gross domestic product (GDP) growth over the threemonth period was still weak, however, at 0.2%. The change was attributed to revised figures for construction output. An earlier report said that construction activity had fallen 2.7% in the January to March period; the June estimate, which indicated a decline of 0.8%, still represents the worst quarter in five years for the industry, however. In the corporate world, shares in Ocado made gains. Along with sportsbetting company GVC, the online retailer joined the FTSE 100 Index in June. Beleaguered highstreet retailer M&S narrowly avoided being demoted. Meanwhile, shares in retail and leisure conglomerate Whitbread rallied towards the end of the month, with investors impressed by spinoff plans for the company s profitable Costa Coffee business. Despite a small drop in likeforlike sales, the highstreet chain has hopes of continuing its successful rollout across foreign markets, particularly Germany and China. SUMMARY UK equity markets fall slightly from May highs Sterling weakness continues to benefit major exporters Economic growth remains weak North America Shares in large US companies were relatively flat during June. Despite a rise towards the middle of the month, concerns over USChina trade tensions created a cautious mood among investors and shares then fell back. US stocks were largely unaffected by the Federal Reserve s (Fed s) decision to raise interest rates by 0.25%. The technology sector led the way on Wall Street, with Facebook climbing to above $200 a share for the first time and Twitter gaining 26% over the month. Media stocks also rose on the back of Walt Disney raising its bid for the majority of TwentyFirst Century Fox, resulting in the latter s share price finishing the month 29% higher. In retail, Michael Kors and Gap ended the month on a positive note, with both share prices gaining 16%. Meanwhile, Starbucks was weaker after its share price fell nearly 14%. The coffee chain lowered its thirdquarter sales forecast and announced it would scale back the number of new outlets and close those that are underperforming. Other notable losses over the month included Xerox, the purveyor of print and digital document solutions, whose shares fell by 11.7%, and American Airlines, which experienced a 13% decrease in share price. The Fed hiked US interest rates from 1.75% to 2%, citing solid economic expansion and job gains. It s the seventh time that the US central bank has raised rates since 2015 as it moves nearer to monetary policy normalisation, with two more rate rises expected before the end of Near the end of June, ongoing concerns regarding the USChina trade tensions were no longer investors only priority, as the focus switched to establishing a crucial EU deal on migrants, the Fed s stress tests on banks and rising oil prices. US shares relatively unmoved in June SUMMARY The Fed hikes interest rates by 0.25% Trade tensions linger The views expressed above are those of Aberdeen Asset Management, as at date of publication. Investment markets and conditions can change rapidly and as such the views expressed should not be taken as a statement of fact nor should reliance be placed on these views when making investment decisions. Past performance is not a reliable indicator of future results. 2

3 World Markets Update continued Europe Shares in major bluechip companies across Europe declined in June. The worstperforming sectors were industrials, basic materials and consumer goods. The top performers were utilities, health care and oil & gas. The European Central Bank (ECB) announced an end to its quantitative easing (QE) programme at its June meeting; its asset purchasing scheme will conclude in December. The ECB also indicated that if inflation continues to grow as expected, it is likely that interest rates will remain at their present levels until next autumn. The Bank left interest rates unchanged and revised its economic growth projections for the eurozone to 2.1%, down from a previous projection of 2.4%. According to the eurozone composite purchasing managers index (PMI), the euro area gained economic momentum in June as it rose from 54.1 in May to 54.8 (a level below 50 indicates that activity levels are falling). June data showed that the eurozone economy grew 2.3% in 2017, but more recent indicators suggested that expansion is lagging in In political news, US president Donald Trump threatened to slap a 20% tariff on all European Union (EU) manufactured automobiles if retaliatory levies on US goods enacted by the EU were not lifted. This uncertainty caused a selloff in European equities. In Italy, a government formed by the populist Five Star Movement and right wing League party was appointed. In Spain, new prime minister Pedro Sanchez was sworn in at the start of the month. The new government only holds 84 seats out of 350 in parliament, which may limit its power and constrain policymaking. The uncertainty has also increased in Germany, given a dispute over migration policy. Interior minister Horst Seehofer is threatening to reject migrants who have registered in another EU country at the German border, a move that Chancellor Angela Merkel opposes. Tensions have grown as a compromise is looking increasingly unlikely. SUMMARY Political uncertainty causes European equities to sell off ECB announces plans to end its QE programme Eurozone composite PMI gains momentum Other Overseas It was a bumpy ride for many emerging and Asian markets, as a trade war between the US and some of its major trading partners escalated. This raised concerns over a deterioration in global trade and a slowdown in economic growth. These developments capped gains that were made following a historic meeting between US president Donald Trump and North Korea s Kim Jungun. Emerging market currencies and stocks were shaken after the US Federal Reserve raised interest rates by 25 basis points and signalled that two more increases were likely in Against this backdrop, the US dollar climbed to its highest level since last July, putting further pressure on emerging market currencies. Argentina, Turkey, Brazil and South Africa all of which nurse large current account deficits have suffered the most in the currency selloff so far this year. In economic news, Chinese data pointed to a moderating economy. Industrial output and retail sales in May missed expectations, while fixed asset investments slowed for the first five months. The data clouded an economic outlook already muddied by the worsening trade dispute with the US. Conversely, India s industrial production accelerated to 4.9% yearonyear in April, reflecting a pickup in manufacturing and mining activity. This compensated for a slowdown in electricity generation. Meanwhile, the Reserve Bank of India unexpectedly raised interest rates by 25 basis points the first increase in more than four years in response to rising inflationary pressures on the back of oilprice gains. Japanese economic data was soft. Services sector growth decelerated in May because of slowing sales, and household spending shrunk. First quarter GDP growth numbers were unchanged from previous estimates at 0.6%, but private consumption was weaker than initially recorded. In May, however, Japan s exports beat expectations, rising at their fastest pace in four months. In politics, Turkish president Recep Tayyip Erdogan overcame a resurgent opposition to win the presidential election. Emerging market currencies decline Trade tensions cause volatility Chinese economic data disappoints SUMMARY The views expressed above are those of Aberdeen Asset Management, as at date of publication. Investment markets and conditions can change rapidly and as such the views expressed should not be taken as a statement of fact nor should reliance be placed on these views when making investment decisions. Past performance is not a reliable indicator of future results. 3

4 World Markets Update continued Commodities Rising trade tensions failed to push up the price of gold in June. Often, when financial markets are turbulent, investors buy the precious metal as they consider it less risky than other investments, such as equities. This month, however, the price per Troy ounce fell from $1, to $1,251.13, its lowest level in six months. The escalation of the trade war (including titfortat increases in tariffs between the US and China) did affect the price of soyabeans. More than half of the soyabeans grown in the US are intended for the Chinese market, so an increase in levies on US exports to China is likely to adversely affect demand. The price per bushel fell to its lowest in nine years. By contrast, oil prices increased. The cost per barrel of Brent crude climbed 2.3% to $79.44, pushed higher by disruption to supplies. These included: the resumption of sanctions on Iran s oil exports; production problems in Canada (a power outage completely halted processing at one oil sands complex on 20 June); and political tussles in Libya, which led to export suspensions. At the end of June, US president Donald Trump asked Saudi Arabia to increase its oil output by as much as 2 million barrels per day, as he believes the oil price is currently too high. Currencies The European Central Bank (ECB) said in the middle of the month that it would halt its quantitative easing programme in December, adding that it did not believe interest rates would rise until the end of summer The announcement precipitated the biggest oneday fall for the euro against the US dollar since the Brexit vote in June However, the single currency subsequently rallied after a rise in the eurozone composite purchasing managers index, indicating that economic activity in the region might revive in the second quarter. The euro was given a further fillip after the EU agreed a deal on migration. Although details remain vague, the deal removes for the time being risks of political instability that could have threatened the survival of the German government. Over the month as a whole, the euro was flat against the dollar, while sterling weakened against the greenback. Elsewhere, emergingmarket currencies were under pressure early in the month. After falling to a twoyear low against the US dollar, the Brazilian real recovered sharply after the country s central bank pledged to defend the currency. Indices Performance Statistics Index Performance Change % over June Performance Change % year to date FTSE AllShare (UK) FTA British Govt Over 15 Years FTSE World (ex UK) ( ) FTSE World Europe (ex UK) ( ) Dow Jones Composite Source: Financial Express, to Capital return performance. The views expressed above are those of Aberdeen Asset Management, as at date of publication. Investment markets and conditions can change rapidly and as such the views expressed should not be taken as a statement of fact nor should reliance be placed on these views when making investment decisions. Past performance is not a reliable indicator of future results. 4

5 World Markets Update continued Bond Markets In June, the US Federal Reserve (Fed) raised interest rates for the second time this year. While that was expected, the Fed also signalled that it believed two further increases would be necessary in In Europe, the European Central Bank (ECB) announced the cessation of its quantitative easing programme in December, but said interest rates were unlikely to rise until mid2019. Both central bank announcements resulted in a rise in the price of government bonds and, inversely, a fall in yields. In the US, the gap between two and 10year Treasury yields fell to its lowest in more than 10 years. Italy s political situation which caused a fair degree of volatility in global bond markets last month continued to stabilise. The newly appointed finance minister moved to reassure markets that Italy would remain in the eurozone. He added that the coalition government would take steps to reduce debt. Italy s twoyear yield which had risen to 2.73% in the last week of May moved definitively below 1%. Indeed, in the last week of June, Italian government bonds considerably outperformed their eurozone peers. Greek bond yields fell after an agreement by the country s eurozone creditors to push back repayment deadlines on close to 100 billion of bailout loans. Over the month as a whole, the 10year US Treasury yield was unchanged at 2.86%. Meanwhile, the yield on the 10year German Bund fell from 0.34% to 0.30%, while in the UK, the 10year Gilt finished June five basis points higher at 1.33%. Volatility in corporate bond markets increased once again in June as trade tensions between the world s major economies picked up materially. Yield spreads between corporate bonds and government bonds widened once again on trade war fears, meaning corporate bonds underperformed government bonds. Higherrisk areas of the market underperformed and highyield bonds suffered significant re pricing. Property The UK commercial property market has continued to make stable gains in recent months, mainly boosted by significant outperformance from the industrial sector. Retail remains the worstperforming area of the market, though, with weaker capital growth and rents. Office rents have continued to be in line with all property, but capital value growth has been weaker than the market as a whole. Difficulties in the retail sector have dominated the headlines over the last few months as a number of retailers and casual dining operators have been forced to rationalise their portfolios. The increasing shift to online shopping, rising labour costs, weaker consumer spending and higher business rates are the main reasons for the decline. House of Fraser announced in June that it would close 31 of its 59 UK stores, while the discount retailer Poundworld entered into administration, putting its portfolio of 350 shops at risk. The retail sector, as a whole, is becoming increasingly polarised: prime shopping destinations in key towns continue to perform well, while secondary assets in oversupplied locations are increasingly vulnerable. In the office sector, investors and tenants are continuing to look for more creative options when it comes to traditional office space. Like the retail sector, there have also been structural changes in the labour market, which have been facilitated by technological advances. The number of flexible workspace offices grew by 10% in 2017, according to research from The Instant Group. Despite substantial takeup by key operators, such as WeWork and The Office Group, the main growth has come from small, independent operators, who now account for 83% of the flexible office assets. Furthermore, this is no longer just a central London concept. Centres in the South East and in regional cities, such as Birmingham and Manchester, also offer a range of flexible options. The views expressed above are those of Aberdeen Asset Management, as at date of publication. Investment markets and conditions can change rapidly and as such the views expressed should not be taken as a statement of fact nor should reliance be placed on these views when making investment decisions. Past performance is not a reliable indicator of future results. 5

6 Scottish Widows pension funds, managed by Aberdeen Asset Management Performance Statistics 1 July 2018 Funds Launch Date Size of Fund ( m) Adventurous Solution 24/10/ Balanced Portfolio 28/01/ Balanced Solution 24/10/ Building Society * 01/07/ Cash 01/07/ Cautious Managed 01/11/ Cautious Portfolio 28/01/ Cautious Solution 24/10/ Consensus 02/03/ Corporate Bond 28/07/ Defensive Managed 01/11/ Defensive Solution 24/10/ Discovery Solution 24/10/ Diversified Assets 01/08/ Dynamic Property 01/08/ Dynamic Solution 24/10/ Emerging Markets 01/11/ Environmental 09/05/ Ethical 25/10/ European 02/11/ European Real Estate 01/11/ Fixed Interest 01/07/ Formerly Lloyds TSB American 01/10/ Formerly Lloyds TSB Cash 01/12/ Performance Change % 1 Year 3 Years 5 Years Annualised Compound Return % 1 Year 3 Years 5 Years 10 Years Q Q Discrete Annual Performance % Q Q Q Q Q Q Q Q

7 Formerly Lloyds TSB European 01/01/ Formerly Lloyds TSB Far East 01/11/ Formerly Lloyds TSB Fixed Interest 01/11/ Formerly Lloyds TSB FTSE 100 Tracker 01/01/ Formerly Lloyds TSB Guaranteed Deposit 01/11/ Formerly Lloyds TSB Island 01/03/ Formerly Lloyds TSB Managed Pension 01/11/ Formerly Lloyds TSB Pension Managed 23/10/ Formerly Lloyds TSB Property 01/02/ Formerly Lloyds TSB UK Equity 01/01/ Fundamental Index Emerging Markets Equity 14/11/ Fundamental Index Global Equity 14/11/ Fundamental Index UK Equity 14/11/ Fundamental Low Volatility Index Emerging Markets Equity 14/11/ Fundamental Low Volatility Index Global Equity 14/11/ Fundamental Low Volatility Index UK Equity 14/11/ Global Equity 09/05/ High Income Bond 28/07/ Indexed Stock 19/04/ International 01/07/ International Equity Tracker * 28/09/ Source: Financial Express as at Performance figures in blue are since launch of the fund. No performance information is shown for funds with less than four full quarters of performance history. Performance figures are in sterling on a bid to bid basis, with income (where applicable) reinvested gross of UK tax and net of total annual fund charges. The figures do not include any initial charge or other product charge(s) that may be applicable. Past performance is not a reliable indicator of future results. The value of an investment is not guaranteed and can go up and down depending on investment performance (and currency exchange rates where a fund invests overseas). Scottish Widows operates four different series of fund prices for its range of pension products. The fund series that applies will depend on the pension product chosen. The prices used for the performance data in this document are based on the series 2 prices in accordance with ABI rules on reporting of past performance. The performance of the funds using series 1 series 3 or series 4 prices will be different and dependent on the relevant fund charges. Not all Scottish Widows products have access to these funds, please refer to the relevant product literature. Full terms and conditions are available on request from Scottish Widows using the contact details provided. Charges, terms and the selection of funds we make available may change. Information on the general and specific risks associated with investing in this fund is available in the relevant fund guide. We may change the investment approach rating for the fund in the future. Please note that the funds marked with an * are not available for new investment and we have therefore ceased to market them to new investors. 7

8 Scottish Widows pension funds, managed by Aberdeen Asset Management Performance Statistics 1 July 2018 Funds Launch Date Size of Fund ( m) Japanese 02/11/ Mixed 01/07/ Multi Manager Diversity 26/05/ Multi Manager Select Boutiques 26/05/ MultiManager Global Real Estate 01/06/ MultiManager International Equity 25/10/ MultiManager UK Equity Focus 25/10/ MultiManager UK Equity Growth 25/10/ MultiManager UK Equity Income 25/10/ North American 02/11/ Opportunities Portfolio 28/01/ Pension Portfolio Four 06/02/ Pension Portfolio One 06/02/ Pension Portfolio Three 06/02/ Pension Portfolio Two 06/02/ Pension Protector 28/07/ PM Cash 21/04/ PM Consensus 02/03/ PM Emerging Markets Equity 02/01/ PM Index Linked Gilt Tracker 25/11/ PM Managed 03/09/ PM Property 21/04/ PM Protection 01/07/ PM Stock Exchange Equity Fund 01/05/ Performance Change % 1 Year 3 Years 5 Years Annualised Compound Return % 1 Year 3 Years 5 Years 10 Years Q Q Discrete Annual Performance % Q Q Q Q Q Q Q Q

9 PM UK Equity Cap 08/02/ PM UK Index 02/01/ PM UK Long Corporate Bond 30/03/ Premier Pension Portfolio 1 31/12/ Premier Pension Portfolio 2 31/12/ Premier Pension Portfolio 3 31/12/ Premier Pension Portfolio 4 31/12/ Premier Pension Portfolio 5 31/12/ Premier Pension Portfolio A 31/12/ Premier Pension Portfolio B 31/12/ Premier Pension Portfolio C 31/12/ Progressive Portfolio 28/01/ Property 01/07/ Retirement Portfolio /11/ Retirement Portfolio /11/ Retirement Portfolio /11/ Retirement Portfolio /11/ Specialist Global Equity 13/12/ Strategic Income Bond 28/07/ Strategic Solution 24/10/ UK All Share Tracker 06/04/ Source: Financial Express as at Performance figures in blue are since launch of the fund. No performance information is shown for funds with less than four full quarters of performance history. Performance figures are in sterling on a bid to bid basis, with income (where applicable) reinvested gross of UK tax and net of total annual fund charges. The figures do not include any initial charge or other product charge(s) that may be applicable. Past performance is not a reliable indicator of future results. The value of an investment is not guaranteed and can go up and down depending on investment performance (and currency exchange rates where a fund invests overseas). Scottish Widows operates four different series of fund prices for its range of pension products. The fund series that applies will depend on the pension product chosen. The prices used for the performance data in this document are based on the series 2 prices in accordance with ABI rules on reporting of past performance. The performance of the funds using series 1 series 3 or series 4 prices will be different and dependent on the relevant fund charges. Not all Scottish Widows products have access to these funds, please refer to the relevant product literature. Full terms and conditions are available on request from Scottish Widows using the contact details provided. Charges, terms and the selection of funds we make available may change. Information on the general and specific risks associated with investing in this fund is available in the relevant fund guide. We may change the investment approach rating for the fund in the future. Please note that the funds marked with an * are not available for new investment and we have therefore ceased to market them to new investors. 9

10 Scottish Widows pension funds, managed by Aberdeen Asset Management Performance Statistics 1 July 2018 Funds Launch Date Size of Fund ( m) UK Equity 01/07/ UK Equity Index * 07/01/ UK Fixed Interest Tracker 06/04/ UK Opportunities 01/06/ UK Real Estate 01/06/ Performance Change % 1 Year 3 Years 5 Years Annualised Compound Return % 1 Year 3 Years 5 Years 10 Years Q Q Discrete Annual Performance % Q Q Q Q Q Q Q Q Source: Financial Express as at Performance figures in blue are since launch of the fund. No performance information is shown for funds with less than four full quarters of performance history. Performance figures are in sterling on a bid to bid basis, with income (where applicable) reinvested gross of UK tax and net of total annual fund charges. The figures do not include any initial charge or other product charge(s) that may be applicable. Past performance is not a reliable indicator of future results. The value of an investment is not guaranteed and can go up and down depending on investment performance (and currency exchange rates where a fund invests overseas). Scottish Widows operates four different series of fund prices for its range of pension products. The fund series that applies will depend on the pension product chosen. The prices used for the performance data in this document are based on the series 2 prices in accordance with ABI rules on reporting of past performance. The performance of the funds using series 1 series 3 or series 4 prices will be different and dependent on the relevant fund charges. Not all Scottish Widows products have access to these funds, please refer to the relevant product literature. Full terms and conditions are available on request from Scottish Widows using the contact details provided. Charges, terms and the selection of funds we make available may change. Information on the general and specific risks associated with investing in this fund is available in the relevant fund guide. We may change the investment approach rating for the fund in the future. Please note that the funds marked with an * are not available for new investment and we have therefore ceased to market them to new investors. 10

11 SW pension funds, managed by other fund managers Performance Statistics 1 July 2018 Funds Launch Date SW Allianz European Equity Dividend 14/11/ Size of Fund ( m) SW Artemis UK Select 19/09/ SW Artemis UK Smaller Companies 19/09/ SW Artemis US Select 14/11/ SW Aviva Investors High Yield Bond 14/11/ SW Aviva Investors Strategic Bond 14/11/ SW Aviva MultiStrategy ('AIMS') Target Income 14/11/ SW Baillie Gifford Japanese Equity Fund 21/04/ SW Baillie Gifford Managed 01/11/ SW Baillie Gifford Multi Asset Growth 14/11/ SW Baillie Gifford North American Equity Fund 21/04/ SW BlackRock Gold & General 05/12/ SW BlackRock Managed 07/07/ SW BlackRock UK 19/09/ SW BlackRock UK Smaller Companies 19/09/ SW BlackRock UK Special Situations Fund 21/04/ SW Fidelity 50:50 Special Situations 18/09/ SW Fidelity American 19/09/ Performance Change % 1 Year 3 Years 5 Years Annualised Compound Return % 1 Year 3 Years 5 Years 10 Years Q Q Discrete Annual Performance % Q Q Q Q Q Q Q Q Source: Financial Express as at Performance figures in blue are since launch of the fund. No performance information is shown for funds with less than four full quarters of performance history. Performance figures are in sterling on a bid to bid basis, with income (where applicable) reinvested gross of UK tax and net of total annual fund charges. The figures do not include any initial charge or other product charge(s) that may be applicable. Past performance is not a reliable indicator of future results. The value of an investment is not guaranteed and can go up and down depending on investment performance (and currency exchange rates where a fund invests overseas). Scottish Widows operates four different series of fund prices for its range of pension products. The fund series that applies will depend on the pension product chosen. The prices used for the performance data in this document are based on the series 2 prices in accordance with ABI rules on reporting of past performance. The performance of the funds using series 1 series 3 or series 4 prices will be different and dependent on the relevant fund charges. Not all Scottish Widows products have access to these funds, please refer to the relevant product literature. Full terms and conditions are available on request from Scottish Widows using the contact details provided. Charges, terms and the selection of funds we make available may change. Information on the general and specific risks associated with investing in this fund is available in the relevant fund guide. We may change the investment approach rating for the fund in the future. Please note that the funds marked with an * are not available for new investment and we have therefore ceased to market them to new investors. 11

12 SW pension funds, managed by other fund managers Performance Statistics 1 July 2018 Funds Launch Date Size of Fund ( m) SW Fidelity Asia 19/09/ SW Fidelity European 19/09/ SW Fidelity Global Special Situations 18/09/ SW Fidelity Managed 07/07/ SW Fidelity Money Builder Income 21/04/ SW Fidelity Special Situations (2006) 18/09/ SW Henderson Cautious Managed 19/01/ SW Henderson Fixed Interest Monthly Income Fund 19/01/ SW Henderson Global Equity Income 19/01/ SW Henderson UK Property Fund 01/06/ SW Insight Global Absolute Return 14/11/ SW Invesco Perpetual Corporate Bond 19/09/ SW Invesco Perpetual Distribution 01/11/ SW Invesco Perpetual Global Bond 19/09/ SW Invesco Perpetual High Income 19/09/ SW Invesco Perpetual Managed 07/07/ SW Investec Cautious Managed 25/10/ SW Investec Diversified Growth 14/11/ SW JPM Emerging Markets 21/04/ SW JPM Europe Dynamic (exuk) 21/04/ SW JPM Global Macro Balanced 01/11/ SW JPM Natural Resources 21/04/ SW Jupiter Distribution 19/01/ SW Jupiter Income 19/01/ Performance Change % 1 Year 3 Years 5 Years Annualised Compound Return % 1 Year 3 Years 5 Years 10 Years Q Q Discrete Annual Performance % Q Q Q Q Q Q Q Q

13 SW Jupiter UK Growth 25/10/ SW Liontrust UK Smaller Companies 14/11/ SW Newton Global Equity 19/09/ SW Newton Global Income 05/12/ SW Newton International Bond 19/09/ SW Newton Managed 07/07/ SW Newton Real Return 05/12/ SW Newton UK Income 19/09/ SW Nordea 1 GBP Diversified Return 14/11/ SW Payden Absolute Return Bond 14/11/ SW Royal London UK Equity Income 14/11/ SW Schroder Diversified Growth 13/12/ SW Schroder Gilt & Fixed Interest 19/09/ SW Schroder Global Cities Real Estate 01/06/ SW Schroder Income Maximiser 03/12/ SW Schroder Managed 07/07/ SW Schroder Tokyo 19/09/ SW Schroder UK Alpha Plus 19/01/ SW Schroder UK Mid /10/ SW Schroder US Smaller Companies 19/09/ SW SLI Global Absolute Return Strategies 05/12/ Source: Financial Express as at Performance figures in blue are since launch of the fund. No performance information is shown for funds with less than four full quarters of performance history. Performance figures are in sterling on a bid to bid basis, with income (where applicable) reinvested gross of UK tax and net of total annual fund charges. The figures do not include any initial charge or other product charge(s) that may be applicable. Past performance is not a reliable indicator of future results. The value of an investment is not guaranteed and can go up and down depending on investment performance (and currency exchange rates where a fund invests overseas). Scottish Widows operates four different series of fund prices for its range of pension products. The fund series that applies will depend on the pension product chosen. The prices used for the performance data in this document are based on the series 2 prices in accordance with ABI rules on reporting of past performance. The performance of the funds using series 1 series 3 or series 4 prices will be different and dependent on the relevant fund charges. Not all Scottish Widows products have access to these funds, please refer to the relevant product literature. Full terms and conditions are available on request from Scottish Widows using the contact details provided. Charges, terms and the selection of funds we make available may change. Information on the general and specific risks associated with investing in this fund is available in the relevant fund guide. We may change the investment approach rating for the fund in the future. Please note that the funds marked with an * are not available for new investment and we have therefore ceased to market them to new investors. 13

14 SW pension funds, managed by other fund managers Performance Statistics 1 July 2018 Funds Launch Date Size of Fund ( m) SW SSgA 50:50 Global Equity Index 03/11/ SW SSgA Asia Pacific Ex Japan Equity Index 21/04/ SW SSgA Emerging Markets Equity Index 05/12/ SW SSgA Europe ex UK Equity Index 21/04/ SW SSgA Index Linked Gilts All Stocks Index 21/04/ SW SSgA Index Linked Gilts Over 5 Years Index 21/04/ SW SSgA International Equity Index 02/10/ SW SSgA Japan Equity Index 21/04/ SW SSgA North America Equity Index 21/04/ SW SSgA Sterling Corporate Bonds All Stocks Index 21/04/ SW SSgA Strategic Diversities 05/12/ SW SSgA UK Conventional Gilts Over 15 Years Index 21/04/ SW SSgA UK Equity Index 02/10/ SW Threadneedle UK Social Bond 14/11/ SW Veritas Asian 14/11/ SW Woodford Equity Income 14/11/ Performance Change % 1 Year 3 Years 5 Years Annualised Compound Return % 1 Year 3 Years 5 Years 10 Years Q Q Discrete Annual Performance % Q Q Q Q Q Q Q Q Source: Financial Express as at Performance figures in blue are since launch of the fund. No performance information is shown for funds with less than four full quarters of performance history. Performance figures are in sterling on a bid to bid basis, with income (where applicable) reinvested gross of UK tax and net of total annual fund charges. The figures do not include any initial charge or other product charge(s) that may be applicable. Past performance is not a reliable indicator of future results. The value of an investment is not guaranteed and can go up and down depending on investment performance (and currency exchange rates where a fund invests overseas). Scottish Widows operates four different series of fund prices for its range of pension products. The fund series that applies will depend on the pension product chosen. The prices used for the performance data in this document are based on the series 2 prices in accordance with ABI rules on reporting of past performance. The performance of the funds using series 1 series 3 or series 4 prices will be different and dependent on the relevant fund charges. Not all Scottish Widows products have access to these funds, please refer to the relevant product literature. Full terms and conditions are available on request from Scottish Widows using the contact details provided. Charges, terms and the selection of funds we make available may change. Information on the general and specific risks associated with investing in this fund is available in the relevant fund guide. We may change the investment approach rating for the fund in the future. Please note that the funds marked with an * are not available for new investment and we have therefore ceased to market them to new investors. 14

15 Scottish Widows life funds, managed by Aberdeen Asset Management Performance Statistics 1 July 2018 These life funds are available to existing customers who are already invested in a Scottish Widows product. New customers should contact their advisers or Scottish Widows for information on fund availability. Funds Launch Date Adventurous Solution 24/10/ Size of Fund ( m) Balanced Portfolio 28/01/ Balanced Solution 24/10/ Cash 01/07/ Cautious Managed 01/11/ Cautious Portfolio 28/01/ Cautious Solution 24/10/ Consensus 02/11/ Corporate Bond 28/07/ Defensive Managed 01/11/ Defensive Solution 24/10/ Discovery Solution 24/10/ Diversified Assets 01/08/ Dynamic Property 01/08/ Dynamic Solution 24/10/ Emerging Markets 01/11/ Environmental 09/05/ Ethical 25/10/ European 02/11/ European Real Estate 01/11/ Fixed Interest 01/07/ Performance Change % 1 Year 3 Years 5 Years Annualised Compound Return % 1 Year 3 Years 5 Years 10 Years Q Q Discrete Annual Performance % Q Q Q Q Q Q Q Q Source: Financial Express as at If less than 5 years are available, performance figures are shown in blue. No performance information is shown for funds with less then four full quarters of performance history. Performance figures are in sterling on a single pricing basis, with income (where applicable) reinvested net of UK tax and net of total annual fund charges. The figures do not include any initial charge or other product charge(s) that may be applicable. Past performance is not a reliable indicator of future results. The value of an investment is not guaranteed and can go up and down depending on investment performance (and currency exchange rates where a fund invests overseas). 15 Full terms and conditions are available on request from Scottish Widows using the contact details provided. Charges, terms and the selection of funds we make available may change. Information on the general and specific risks associated with investing in this fund is available in the relevant fund guide. All information is sourced from Scottish Widows or the relevant fund management group unless otherwise stated.

16 Scottish Widows life funds, managed by Aberdeen Asset Management Performance Statistics 1 July 2018 These life funds are available to existing customers who are already invested in a Scottish Widows product. New customers should contact their advisers or Scottish Widows for information on fund availability. Funds Launch Date Formerly Lloyds TSB American 01/11/ Size of Fund ( m) Formerly Lloyds TSB Balanced 01/10/ Formerly Lloyds TSB Cash 01/10/ Formerly Lloyds TSB Equity 07/03/ Formerly Lloyds TSB European Growth 01/11/ Formerly Lloyds TSB Fixed Interest ex BHL 07/03/ Formerly Lloyds TSB Fixed Interest ex TSB 01/10/ Formerly Lloyds TSB German Growth 01/10/ Formerly Lloyds TSB Homebuyers 06/04/ Formerly Lloyds TSB Income S1 01/10/ Formerly Lloyds TSB Income S2 01/11/ Formerly Lloyds TSB Island Equity 10/01/ Formerly Lloyds TSB Japan Growth 01/11/ Formerly Lloyds TSB Managed ex BHL 01/09/ Formerly Lloyds TSB Managed ex TSB 07/03/ Formerly Lloyds TSB Managed Investment Fund S1 30/11/ Formerly Lloyds TSB Managed Investment S2 31/10/ Formerly Lloyds TSB Money Fund 07/03/ Formerly Lloyds TSB Options Equity 01/01/ Formerly Lloyds TSB Options Managed 01/01/ Formerly Lloyds TSB Options Money 01/01/ Formerly Lloyds TSB Pacific Basin 01/11/ Formerly Lloyds TSB Property ex BHL 02/10/ Formerly Lloyds TSB Smaller Companies and Recovery 01/02/ Performance Change % 1 Year 3 Years 5 Years Annualised Compound Return % 1 Year 3 Years 5 Years 10 Years Q Q Discrete Annual Performance % Q Q Q Q Q Q Q Q