AXA Fixed Income

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27 March 2012

AXA Fixed Income

Chris Iggo, Chief Investment Officer - Fixed Income Rob Bailey, Head of UK Sales

Fixed Income Team

Chris Iggo, Chief Investment Officer – AXA Fixed Income

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17 years’ experience

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Chris was appointed Chief Investment Officer of AXA Fixed Income in September 2008 .

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Chris joined AXA IM in May 2005 as a Senior Investment Strategist with responsibility for overseeing the macroeconomic analysis, currency research and input to the tactical asset allocation process in the UK.

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Prior to joining AXA IM, Chris spent five years as Head of Strategy at Cazenove Fund Management. Between 1996 and 2000 Chris worked at Barclays Capital, first as Chief US Economist (in New York) and then as Chief European Economist. Before that, Chris spent seven years at Chase Manhattan Bank in London and New York as an Economist and Foreign Exchange Strategist.

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Chris holds a BSc and MSc in Economics from the University of London.

AXA Fixed Income team Theo Zemek Global Head of AXA Fixed Income

Chris Iggo CIO, Global Head of Rates Jérôme Broustra Head of Rates Team, Paris

Global Rates & Aggregate

Euro Rates & Aggregate

Paris

Paris, Frankfurt

Andrea Dacquin

(1)

Inflation Paris

Xavier Galiez

Jonathan Baltora

Alexandre Menendez

Sunjay Mulot

Marion le Morhedec

Visna Nhim

Johann Ple Olivier Vietti

London

Zurich

Hassiba Ait-Braham

Peter Andres

Iva Alexandrova

Alvin Ong

Bernard Bloch

Magda Branet

Su Hwei Tee

Nick Hayes

(2)

John Madziyire David Dyer (London)

Gonul Cibik Richard Mooser

Leila Bouraoui

Jurgen Gevatter

Source: AXA IM as at 26/03/2012. (1) Also Head of Portfolio Engineering Group. (2) Also manages Credit portfolios. *Teams also managing Credit portfolios.

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Head of AXA Fixed Income Asia

Swiss Franc Rates & Aggregate*

Ahmed El Tobgui

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Phil Chow

Head of Emerging Markets

Sterling Rates & Aggregate

Matthieu de Clermont Lenaig Pichavant

Damien Buchet

Emerging & Asian Markets* Paris & Singapore

Constance Hunter Deputy CIO

US Dollar Rates & Aggregate Greenwich

The global economy is looking healthier

65

Purchasing Manager Index - Manufacturing

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Index

55 50

45 40 35 30 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 EZ Source: Bloomberg 20.03.12

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UK

US

Source : Bloomberg

Inflation is towards the higher end of the range

Consumer Price Inflation 6

US

UK

Europe

5 4

Percent Per Year

3 2 1 0 -1 -2 -3 Mar-97

Mar-00

Mar-03

Mar-06

Mar-09 Source: Datastream

Source: DataStream 20.03.12

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No significant increase in interest rates expected

Futures Market Implied 3-Month Interest Rates 1.6 1.4

Percent

1.2 1.0 0.8 0.6 0.4 0.2 EUR

UK

US

0.0 Spot

Jun-12

Dec-12

Jun-13

Dec-13

Jun-14 Source : Datastream

Source: DataStream 20.03.12

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Italy and Spain – spread levels depend on pace of fiscal reform Euro Government Bonds: Spreads vs Germany 7

Spread vs German Bunds (Percent)

6 5 4 3 2 1 0 -1 May-91

May-94

May-97

May-00 France

Source: DataStream 20.03.12

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May-03 Spain

Italy

May-06

May-09

May-12 Source: Datastream

Fixed Income Strategy

Interest rate risk

Better sentiment

Government bonds yields too low

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Underweight government bonds relative to credit

“Risk-on”

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Short duration strategies

Liquidity and better economic data environment

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Investment grade credit

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Global high yield

Inflation Some near term downward momentum in headline inflation

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Longer term potential for higher inflation

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Global inflation bonds

Credit risk is re-pricing; interest rate risk remains under-priced

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Impact of a rise in Bank of England (BoE) rates 

Historically, the Corporate 1 - 5 Years segment outperformed other segments in periods of rising interest rates: Slow rise in interest rates (31/07/06 – 31/07/07)

Sharp rise in interest rates (31/08/99 – 29/02/00) 6.5%

6.0%

BOE

BOE

6.0% 5.5% 5.5% 5.0% 5.0% 4.5%

Cumulative Performance

2.46%

1.33%

1.31%

Corporate 1-5 Years Cumulative Performance

2.86%

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Jul-07

Jun-07

May-07

Apr-07

Corporate Sterling Gilts All Maturities Broad Market All Maturities -0.08%

Source: AXA IM / Bloomberg / BoA Merrill Lynch as at 31/12/2011. BoA Merrill Lynch Sterling Indices: Corporate 1 - 5 Years (UCOV), Corporate All Maturities (UC00), Sterling Broad Market (UK00), and Gilts All Maturities (G0L0).

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Mar-07

Feb-07

Jan-07

Dec-06

Broad Market & Government

Credit

Corporate Sterling Gilts All Maturities Broad Market All Maturities 1.31%

Nov-06

Oct-06

Sep-06

Aug-06

Jul-06

Feb-00

Jan-00

4.0%

Broad Market & Government

Credit Corporate 1-5 Years

Dec-99

Nov-99

Oct-99

Sep-99

Aug-99

4.5%

0.03%

0.23%

Inflation – a major risk to long duration, low yielding assets Inflation-Linked vs Bonds and Equities 300 Barclays Global Inflation MSCI Global Equity

250

JPM Global Bond Total Return Index (Sep 98 - 100)

Large government deficits + Central bank balance sheet expansion + Rising emerging market domestic demand = Medium-term inflation risks

200

150

100

50 Nov-98

Nov-00

Nov-02

Nov-04

Nov-06

Nov-08

Nov-10

Source: Datastream Source: DataStream 20.03.12

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AXA Short Duration pooled product range 

Short Duration credit is a long-standing expertise within AXA Fixed Income

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Over £10bn globally under management, across four existing short duration strategies

Investment Grade

High Yield

Sterling Short Duration Credit

Euro Short Duration Credit

£88m under management

€870m under management

Flagship fund launched in 2010

Flagship fund launched in 2009

US Short Duration High Yield

Europe Short Duration High Yield

$14bn under management

€43m under management

Strategy developed in 2001

Flagship fund launched August 2011

We have extensive experience in managing short duration strategies Source: AXA IM as at 29/02/2012.

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AXA Inflation-linked pooled funds 

A long-standing expertise within AXA Fixed Income (more than 25 years)

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Over €17.3bn* global inflation-linked assets under management in London and Paris Global

AXA WF Global Inflation Bonds

Advantages: 

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Worldwide exposure, including those perceived as having the greatest potential for rising inflation (e.g. the US, UK, Emerging markets) Active country allocation within Eurozone

Regional Advantages: 

Region-specific exposure enabling investors to match liabilities in their local currency

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Diversification outside of the regional investment zone (up to 10% of the Eurozone fund and 20% of the Sterling fund)

Source: AXA IM as at 29.02.12. *As at 31/10/2011

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£1.53bn under management Launched in 2005 Portfolio manager: Marion Le Morhedec

AXA Sterling Index-Linked Fund

AXA WF Euro Inflation Bonds

£88m under management

£187m under management

Launched in 2004

Launched 2005

Portfolio manager: David Dyer

Portfolio manager: Marion Le Morhedec

We have extensive experience in managing inflation-linked strategies

Important notice This communication is intended for professional advisers only and must not be relied upon or distributed to retail clients. Circulation must be restricted accordingly. Issued by AXA Investment Managers UK Limited registered in England No 01431068. The registered office address is 7 Newgate Street, London EC1A 7NX. Authorised and regulated by the Financial Services Authority and a Member of IMA. This document does not constitute an offer to sell or buy any units in the Fund. Information relating to investments is based on research and analysis undertaken or procured by AXA Investment Managers UK Limited for its own purposes and may have been made available to other members of the AXA Group of Companies which, in turn, may have acted on it. Whilst every care is taken over these comments, no responsibility is accepted for errors and omissions that may be contained therein. It is therefore not to be taken as a recommendation to enter into any investment transactions.

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