UFG-LFP

	Libroblig Obligations Emergents In today’s market where opportunities are rare, diversification could be a good strategy. Emerging sovereign debt offers higher yields and carry opportunities compared to the debt of European countries. In developed countries where the debt ratios are higher, sovereign debt offers lower spreads. LFP Emerging Bonds can take advantage of these market conditions. The spread associated with Tier 1 and Lower Tier 2 debt is favourable and future regulations are likely to limit the banking system’s risk. Future initiatives to regulate banking sector activities as announced by President Obama could have a negative impact on profitability but a positive impact on the banks’ sustainability, which should reduce the risk premiums on subordinated debt. We consider subordinated debt to be the highest yielding asset within the investment grade corporate zone (LFP Libroblig, LFP Sub Debt).

	Short-term interest rates remain low. For those who think it’s time to consider a change and anticipate an increase in rates: LFP Protectaux.

	Sovereign European credit risk (spreads), for a number of European countries, is higher than corporate investment grade. It might be a good time to revise your position on LFP Oasis 2013 (European credit fund). However positive the consensus for 2010, the future for equities remains somewhat uncertain. Convertible bonds offer a compromise between credit exposure and equity potential. For those investors who are prepared to take that extra risk, convertible bonds offer an interesting risk/return ratio (LFP Convertibles Dynamique). And for those who are already exposed to equities and concerned about the volatility of markets, we recommend seeking protection through a volatility fund (LFP Long Vol).

2/3/2010