UPDATE ON OUR INVESTMENTS IN RUSSIA

We are shocked and deeply saddened by the invasion of Ukraine. This is a truly distressing time for the people of Ukraine and for the people of Russia who do not support what is unfolding.

The uncertainty caused by the start of hostilities in the Ukraine has added to the current bout of stock market turbulence.

Ahead of Russia’s invasion, volatility was already a feature of recent markets worried about the trajectory of global economic growth, following a strong rebound of many asset classes from the market lows of early 2020, and the need for central banks to raise interest rates to curb inflationary pressures.

It’s worth recalling the sharp level of market falls in shares and bonds across the world in March of 2020, at the height of the Covid-19 pandemic. We saw markets and economic growth stage robust recoveries, even though the pandemic is not over. To put it into context, global equity markets (as measured by the MSCI World Index) posted a strong return of around 23% in sterling terms over 2021, and similarly robust returns in 2019 and 2020 calendar years.

But it was a reminder that shorter-term volatility in investment markets can seem sudden and even worrying, but that maintaining investment discipline and not overreacting to short-term declines is of paramount importance.

Scottish Widows investment in Russia

Exposure to Russian stocks within the Scottish Widows fund range is limited. Prior to Russia’s invasion of Ukraine our multi-asset funds typically held less 0.5% in Russian stocks.

Given the gravity of the situation in Ukraine we are selling out of all listed Russian equities in our mandated funds as soon as practicable. We are also in active discussions with the investment managers of the other funds we invest in on behalf of customers on their approach.

Our mandated funds have no exposure to Ukrainian stocks
Scottish Widows Pension Portfolio Funds had less than 0.5% invested in Russian stocks prior to the invasion of Ukraine.

We are monitoring the situation closely. We do not propose any changes to our asset allocation as a result of the recent developments in Ukraine and remain committed to our investment discipline and long-term investment focus as we believe these lead to better investment outcomes for our customers.