A number of members have asked us about our approach to investing in fixed interest. GESB's approach is to invest globally in a blend of sovereign bonds (bonds issued by governments) and credit securities (bonds issued by companies or securities backed by income producing assets).

Depending on the market environment, GESB allocates between sovereign bonds and credit securities and we believe that this approach offers the best outcome for members. For example, in 2008 allocations to sovereign bonds provided solid returns. However, during 2009 it has been the investments in credit securities that have made good contributions to overall fixed income performance.

We are currently reviewing our external fund managers in these asset classes with the aim of ensuring that the managers' specific expertise and abilities are best suited to maximising risk adjusted returns.