James GledhillGl b l H d f Hi h Yi ldGlobal Head of High Yield

Where now for High Yield?

This presentation is intended for professional advisers only and must not be relied upon by retail clients. Circulation must be restricted accordingly.

AXA Global High Income Fund Performance vs. UK High Yield sector

16AXA Global High Income RIMA £ High Yield3rd Quartile

12.72

14.13

12

14

8.50 8.568

10

%

1st Quartile

2nd Quartile

1st Quartile

7.447.54 7.276.80

6

2

4

01 Year 3 Years 5 Years 10 Years

1st or 2nd quartile performance across multiple cycles

16890

Source: AXA IM / Lipper as at 30/04/2013. Performance shown is annualised and for the AXA Global High Income R Acc share class, net of fees, calculated using mid prices. Past results are not necessarily indicative of future performance. No assurances can be made that profits will be achieved or that substantial losses will not be incurred.

q p p y

2

Global High Yield in figures

Split by ratingKey characteristics Market Value £1,184bn

Historical split by currency*

CCC13%

CC & below<1% 1,800,000

2,000,000US

Number of Issues 3,206

Number of Issuers 1,549

Modified Duration 3.52 yearsBB

49%B38%

13%

800 000

1,000,000

1,200,000

1,400,000

1,600,000NON US

S lit b t

y

Yield-to-worst 5.38%

Average Rating B1

38%

0

200,000

400,000

600,000

800,000

810121416

Split by sector 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 YTD 13

02468

Large, deep, diversified universe

16890

Source: AXA IM / Bloomberg as at 30/04/2013. (HW00: BofA ML Global High Yield Index). *Split of market value in USD million. Yield figures quoted will vary in the future and are not guaranteed.

Large, deep, diversified universe

3

Macro

At the risk of stating the obvious:

USUSThe Good(well OK)

More robust bank / corporate restructuring Staggered / staged deleveraging Virtuous circle

Core EuropeCore EuropeThe Bad

Peripheral CountriesPeripheral CountriesThe Ugly Stagnation / unsustainable boom Internal devaluation / damaging unemployment Vicious circle

Economies are either not or barely back to pre-recession peaks, 5 years on

Hard to see interest rate rises any time soon

Sentiment is improving in the US (probably justified) & in Europe (less convinced)

Differences are in both fiscal and monetary policy

16890

Source: AXA IM.

4

High Yield Valuation & Technicals

Following a very strong 2012 we entered 2013 with reasonable, rather than cheap, valuations

vsYield Spread

Absolute Measure Relative Measure

Low in historic terms, but need to consider current interest rate levels

Currently around average levels yet defaults are at low levels

16890

Source: AXA IM as at 24/05/2013.

5

Market outlook

2300

16%

18% Default Rate, % OAS

European default rates and spreads

2.0% in Europe for 2012 and forecasted for 2013

800

1300

1800

6%

8%

10%

12%

14%

SpreadsD

efau

lts

15 year average = 4.41%

15 year average = 713 European average default rate 4.4%

Historical European default rates are below the

-200

300

0%

2%

4%

6% US average

Downside riskHistoric European default rates with 2013 forecasts

12%

14%

Downside risk

More volatility due to persisting problems with sovereign debt in Eurozone.

4%

6%

8%

10%g

Company fundamentals, however, remain strong which bodes well for the asset class

Benign environment for High Yield credits

0%

2% asset class.

16890

Benign environment for High Yield credits Source: S&P / Moody’s / JP Morgan 31/12/2012.

6

High Yield spreads

Breakdown of Euro HY (%)

High Yield spreads are still elevated relative to pre-crisis era

16890

Source: RBS Credit Strategy as at 23/05/2013.

High Yield spreads are still elevated relative to pre crisis era

7

Default outlook

We expect the default rate in both US and European High Yield markets to remain low

Default peaks are typically the result of a significant mismatch between expectation and outcomedeterioration in corporate metrics in a weak economy can be managed through risk controls……deterioration in corporate metrics in a weak economy can be managed through risk controls

There are components in the expected default figures which do not concern us“Selective defaults”Zombie companies of some scale which are expected to default in the next couple of years but are well identified and therefore not relevantbut are well identified and therefore not relevant

16890

Source: AXA IM as at May 2013.

8

US vs Europe Credit

US Europe

Better macro environment Fewer signs of risk taking / event risk

Lower headline risk

Better liquidity

Significantly better average credit rating

P i h l / fi i l t Peripheral / financial component

Important to note that we expect the default rate for US and Europe to be similar over the next year

16890

Source: AXA IM.

9

AXA Global High Income Fund

Characteristics Fund IndexAUM £149.7m £1,184.2bnMaturity 3 56 6 26 49%50%

60%Fund

GBP8%

CHF1%

Breakdown by rating2 Breakdown by currency

Maturity 3.56 6.26Yield1 5.55% 5.38%Duration1 2.74 3.52Average Coupon 8.09% 7.57%

25%

44%

25%

38%

13%%

20%

30%

40%

50%Index EUR

14%

8%

OAS 482 482Number of Issuers 372 1,549Number of Issues 449 3,206

4% 2% 1%0% 0% 0%0%

10%

Cash BBB BB B CCC or under

NR USD77%

13%

10% 10%

15%

11%

14%12%

10%12%

16%Fund Index

Breakdown by sector3

4%

<1%

4% 3%

10% 9%

3%

10%

6%

3%2%

5%

1%

6% 6%

1%0% 0%

4%6%

4% 3% 3%

6%

1%

7%

2%

10%

4%

9%

4%4%

8%

<1% 1% 1%0% 0% 1%0%

16890

Source: AXA IM / Bloomberg as at 30/04/2013. (1) Yield and duration calculations include cash held within the portfolio, use the next-call method for all Financials in the portfolio and duration/yield-to-worst for all other holdings. (2) Rating is the worst of S&P, Moody’s and Fitch. (3) ML Level 3 breakdown. All breakdowns exclude currency forwards and futures. Data is unaudited and sourced from our front office portfolio management system, ThinkFolio®. Please note that the yield calculations are based on the portfolio of assets and may NOT be representative of what clients invested in the fund may receive as a distribution yield. Yield figures quoted will vary in the future and are not guaranteed. Index shown is BofA Merrill Lynch Global High Yield Bond Index (HW00). OAS: Option Adjusted Spread. Past performance is not a guide to future returns.

10

AXA Global High Income FundMacro views translated

“Fixed Income-Like”• Spread sensitive• Maturity curve

“Equity-Like”• Overall risk premiums• Default riskCharacteristics

• Maturity curve • Industry outlook

• Default risk• Unique operating trends

35%

40%AXA Global High IncomeBofA ML Global High Yield Index

25%

30%

35% g

15%

20%

0%

5%

10%

Shortest Duration

Short Duration 0-5% Yield 5-6% Yield 6-7% Yield 7-8% Yield 8-9% Yield 9%+ Yield Long Duration

DEFENSIVE BETTER QUALITY INTERMEDIATE RISK SPECULATIVEDEFENSIVE BETTER QUALITY INTERMEDIATE RISK SPECULATIVE

16890

Source: AXA IM as at 30/04/2013. Breakdown excludes cash, currency forwards and futures.

11

Conclusion

Hard to overstate the importance of Central Bank behaviour to the l ti f fi i l tvaluation of financial assets

No rose-tinted glasses on macro outlook No rose tinted glasses on macro outlook

Corporate profitability – broadly fine

Corporate risk appetite is modest

Refinancing straightforward

Valuations attractive / reasonable

Technicals positive

Attractive risk / reward in continuing ‘risk-on’ / ‘risk-off’ environments

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Disclaimer

This presentation is intended for Professional Advisers only and should not be relied upon by retail clients. Circulation must be restricted accordingly. Any reproduction of this information, in whole or in part, is prohibited.

This presentation does not constitute an offer to sell or buy any units in the Fund(s). Information relating to investments may have been 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 expertises within the AXA Investment Managers group of companies who in turn may have acted upon it. Whilst every care is taken over these comments, no responsibility is accepted for errors omissions that may be contained therein. It is therefore not to be taken as a recommendation to enter into any investment transactions. Information in this document may be updated from time to time and may vary from previous or future published versions of the document.

This presentation should not be regarded as an offer, solicitation, invitation or recommendation to subscribe for any AXA IM investment service or product and is being provided for informational purposes only. The views expressed do not constitute investment advice and do not necessarily represent the views of any company within the AXA Investment Managers Group and may be subject to change without notice. No representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein.

Past performance is not a guide to future performance. The value of investments and the income from them can fluctuate and investors may not get back the amount originally invested. Changes in exchange rates will affect the value of investments made overseas. Fixed income securities are subject to interest rate risk, credit risk, prepayment risk and market risk. High yield securities are subject to a greater risk of loss of principal and interests than higher-rated, investment grade fixed income securities. Investments in newer markets and smaller companies offer the possibility of higher returns but may also involve a higher degree of risk. An initial charge is usually made when you purchase units. Your investment should be for the medium to long term i.e. typically 5-10 g g g y y p g yp yyears.

Before investing, you should read the prospectus, which includes investment risks relating to these funds. The information contained herein is not a substitute for independent advice.

AXA Fixed Income is an expertise of AXA Investment Managers UK Limited. Issued by AXA Investment Managers UK Limited, which is authorized and regulated by the Financial Conduct Authority in the UK. Registered in England and Wales No: 01431068. Registered Office: 7 Newgate Street, London EC1A 7NX. Telephone calls may be recorded for quality assurance purposes. 16890 06/2013

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