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Standard Life plc - Annual Report and Accounts 2007
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Investment management - Financial market overview and investment performance

Financial market overview

Market conditions have been volatile during 2007, particularly in the second half of the year. Concerns about US sub-prime lending triggered a global crisis of confidence in the credit markets which, in turn, led to serious dislocation of the money markets from August onwards. Equity markets in both the UK and US reached record highs during the first half of the year but lost ground as the impact of the credit crisis began to feed through. Some of the volatility was reflected in changing market conditions in the Retail channel. However investor behaviour in the Institutional channel, which generated just under 70% of third party gross new business in 2007, was minimally impacted.

Investment performance

Even in these turbulent market conditions, we continued to deliver a good investment performance for the year. The money weighted average across the portfolio was well above median for all time periods from 1 year to 10 years and remains in the top quartile over 3 and 5 years. Of our 58 retail funds, 36 were above median and 13 were top quartile over the past 12 months.