TIDMREC
RNS Number : 3055T
Record PLC
17 July 2015
17 July 2015
RECORD PLC
FIRST QUARTER TRADING UPDATE
Record plc ("Record" or the "Company"), the specialist currency
manager, announces today that the Group's assets under management
equivalents ("AUME") as at 30(th) June 2015 totalled $56.6 billion
(31(st) March 2015: $55.4 billion).
AUME expressed in Sterling as at 30(th) June 2015 totalled
GBP36.0 billion (31(st) March 2015: GBP37.3 billion).
1. AUME composition
Record saw an increase of 2% in AUME between 31(st) March 2015
and 30(th) June 2015 when expressed in US Dollars and a decrease of
4% when expressed in Sterling. The composition of AUME by product
was as follows:
AUME $ billion
--------------------------------------------------
30(th) June 31(st) March
2015 2015
--------------------- ------------ -------------
Dynamic Hedging 9.3 9.2
Passive Hedging 42.1 41.2
Currency for Return 4.9 4.8
--------------------- ------------ -------------
Cash & Futures 0.3 0.2
--------------------- ------------ -------------
Total 56.6 55.4
--------------------- ------------ -------------
2. AUME Movement
Net client AUME flows in the three months to 30(th) June 2015 by
product were as follows:
Net client AUME flows - $ billion
----------------------------------------------------
3 months to 3 months to
30(th) June 31(st) March
2015 2015
--------------------- ------------- --------------
Dynamic Hedging - (1.0)
Passive Hedging 0.5 1.7
Currency for Return 0.1 1.9
--------------------- ------------- --------------
Cash & Futures - -
--------------------- ------------- --------------
Total 0.6 2.6
--------------------- ------------- --------------
Record had 53 clients at 30(th) June 2015 (31(st) March 2015: 55
clients), excluding a new mandate with six underlying clients
signed in the quarter, which we expect to be funded in the current
quarter.
The factors other than client flows, which have had an aggregate
impact on AUME during the quarter of +$0.6 billion, were as
follows:
(i) Exchange rate movements: +$2.1bn Exchange rate movements
during the period affect the conversion of non-US Dollar mandate
sizes into US Dollar AUME.
(ii) Movements in global stock and other markets: -$1.5bn Substantially all the Passive and Dynamic Hedging, and some of the Currency for Return mandates, are linked to stock and other market levels. Consequently AUME is affected by movements in these markets.
3. Investment performance
Our Dynamic Hedging programmes performed as expected for US
clients during the quarter, controlling hedging losses in response
to the US Dollar weakening against the majority of currencies. The
largest negative returns came from hedges on the Euro and Pound;
however, losses were contained as hedge ratios were reduced over
the quarter. There were some partially offsetting gains from
hedging the Japanese Yen which weakened against the US Dollar
during the period.
For UK-based Dynamic Hedging clients the programmes also
performed as expected, generating positive returns as Sterling
strengthened against the weighted basket of currencies in the
programmes. Gains came from hedging the Japanese Yen and US Dollar,
where hedge ratios increased systematically over the quarter in
response to appreciating Sterling. Hedging the Euro, where hedge
ratios remained high throughout the period, also generated positive
returns.
Investment performance in Record's Active Forward Rate Bias
(FRB) product was negative during the three months to 30(th) June
2015, and for an ungeared portfolio equated to a return of -0.46%
(three months to 31(st) March 2015: return of -4.22%). This
compares to a -2.61% return in the quarter for the FTSE Currency
FRB10 index (excess return in Sterling). This variance was mainly
the result of differences in the allocations to the New Zealand
Dollar which depreciated significantly during the period. The FTSE
FRB10 Index Fund continued to track the index closely, on a
1.8x--geared basis.
Record's Emerging Market product investment performance was
negative during the quarter and for an un-geared portfolio equated
to a quarterly return of -0.70% (three months to 31(st) March 2015:
return of +1.19%). This negative performance was mainly
attributable to losses from the Peruvian Nuevo Sol, Mexican Peso
and Chilean Peso. Annualised performance since inception (30(th)
November 2009) for an un-geared portfolio was +1.49% p.a.
Investment performance in the Multi-Strategy product that uses
the Active FRB strategy was negative during the quarter as the
Momentum, Value, Emerging Market and Active FRB strategies all
generated negative returns. For an un-geared portfolio, the return
was -0.81% over the quarter (three months to 31(st) March 2015:
return of -1.15%). Annualised performance since inception (31(st)
July 2012) for an un-geared portfolio is +1.39% p.a.
A version of the Multi-Strategy product which started earlier
this year and uses the FTSE Currency FRB10 index strategy instead
of the Active FRB product, produced negative returns of -1.14% for
an ungeared portfolio during the three months to 30(th) June
2015.
4. AVERAGE FEE RATES AND PERFORMANCE FEES
During the quarter to 30(th) June 2015, fee rates for all
products remained broadly unchanged from the previous quarter. No
performance fees were earned in the quarter.
5. CHIEF EXECUTIVE'S COMMENT
Chief Executive James Wood-Collins, commenting on business
development, said:
"Although the first quarter of this financial year has seen
fewer inflows than the last quarter of the prior year, it has been
no less busy in terms of both market activity and client and
prospective client engagement.
"Within markets, the ongoing Greek debt and bailout saga has
kept the Eurozone and by implication the Euro firmly in the public
eye. Whilst the impact on Euro exchange rates has been modest, and
so far there has been little effect on market liquidity or
functioning, the crisis does serve to remind investors of currency
risk.
"When combined with the continued expectation of divergent
monetary policy and heightened volatility, we are not surprised to
see elevated levels of interest maintained in both currency risk
management and currency for return opportunities from institutional
investors and their advisers.
"Our diversified product suite means Record is well placed to
take advantage of such interest, whether from a risk-averse or a
risk-taking perspective and we continue to engage with potential
clients and their advisers across a broad range of currency issues
and geographies. As such we are hopeful that further progress can
be made in the current financial year."
Record will announce its second quarter trading update on 16(th)
October 2015.
For further information, please contact:
Record plc Tel: +44 (0) 1753 852 222
James Wood-Collins, Chief Executive Officer
Steve Cullen, Chief Finance Officer
MHP Tel: +44 (0) 20 3128 8100
Nick Denton record@mhpc.com
Jack Holden
Jennifer Iveson
Notes to Editors
Record plc
Record is a specialist currency manager and provider of currency
hedging services for institutional clients. Founded in 1983, Record
has established a market leading position as a currency manager.
Specifically, the Group has a leading position in managing Currency
Hedging and Currency for Return for institutional clients.
The Group has three principal product lines:
- Dynamic Hedging, where Record seeks to eliminate the impact of
currency movements on elements of clients' investment portfolios
that are denominated in foreign currencies when these movements are
expected to result in an economic loss to the client, but not to do
so when they are expected to result in an economic gain;
- Passive Hedging, where Record seeks to eliminate fully or
partially the economic impact of currency movements on elements of
clients' investment portfolios that are denominated in foreign
currencies; and
- Currency for Return, in which Record enters into currency
contracts for clients with the objective of generating positive
returns.
Record (LSE: REC) was admitted to trading on the London Stock
Exchange on 3(rd) December 2007.
This announcement includes information with respect to Record's
financial condition, its results of operations and business,
strategy, plans and objectives. All statements in this document,
other than statements of historical fact, including words such as
"anticipates", "expects", "intends", "plans", "believes", "seeks",
"estimates", "may", "will", "continue", "project" and similar
expressions, are forward-looking statements.
These forward-looking statements are not guarantees of the
Company's future performance and are subject to risks,
uncertainties and assumptions that could cause the actual future
results, performance or achievements of the Company to differ
materially from those expressed in or implied by such
forward-looking statements.
The forward-looking statements contained in this document are
based on numerous assumptions regarding Record's present and future
business and strategy and speak only as at the date of this
announcement.
The Company expressly disclaims any obligation or undertaking to
disseminate any updates or revisions to any forward-looking
statements contained in this announcement whether as a result of
new information, future events or otherwise.
This information is provided by RNS
The company news service from the London Stock Exchange
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