TIDMREC
RNS Number : 6475M
Record PLC
22 January 2016
RECORD PLC
THIRD 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 31(st) December 2015 totalled $53.5
billion (30(th) September 2015: $53.3 billion).
AUME expressed in Sterling as at 31(st) December 2015 totalled
GBP36.3 billion (30(th) September 2015: GBP35.2 billion).
1. AUME composition
AUME expressed in US dollars increased by 0.4% between 30(th)
September 2015 and 31(st) December 2015 and increased by 3% when
expressed in Sterling. The composition of AUME by product was as
follows:
AUME $ billion
----------------------------------------------------------
31(st) December 30(th) September
2015 2015
--------------------- ---------------- -----------------
Dynamic Hedging 8.2 8.7
Passive Hedging 42.3 42.1
Currency for Return 2.8 2.3
--------------------- ---------------- -----------------
Cash & Futures 0.2 0.2
--------------------- ---------------- -----------------
Total 53.5 53.3
--------------------- ---------------- -----------------
2. AUME Movement
Net client AUME flows in the three months to 31(st) December
2015 by product were as follows:
Net client AUME flows - $ billion
------------------------------------------------------------
3 months to 3 months to
31(st) December 30(th) September
2015 2015
--------------------- ----------------- ------------------
Dynamic Hedging (0.7) 0.1
Passive Hedging 0.1 1.3
Currency for Return 0.4 (2.5)
--------------------- ----------------- ------------------
Cash & Futures - (0.1)
--------------------- ----------------- ------------------
Total (0.2) (1.2)
--------------------- ----------------- ------------------
Record had 58 clients at 31(st) December 2015 (30(th) September
2015: 54 clients).
Other than client flows, the factors which have had an aggregate
impact on AUME during the quarter of +$0.4 billion, were as
follows:
(i) Movements in global stock and other markets: +$1.6bn 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 may be affected by movements in these markets.
(ii) Exchange rate movements: -$1.2bn Exchange rate movements
during the period affect the conversion of non-US dollar mandate
sizes into US dollar AUME.
3. Investment performance
For US clients during the quarter, our Dynamic Hedging
programmes generated positive returns as the US dollar strengthened
against the basket of foreign currencies. The largest gains came
from hedging the Canadian dollar, as hedge ratios remained high
throughout the period. Substantial gains were also made from
hedging the euro, as the currency weakened and the hedge ratio
increased over the quarter. There were some partially offsetting
negative returns from hedging the Australian dollar; however,
losses were contained as the hedge ratio fell significantly over
the quarter.
For UK-based Dynamic Hedging clients the programmes controlled
hedging losses in response to Sterling weakening against the basket
of foreign currencies. Negative returns were primarily driven by
hedging the US dollar; however, losses were limited as the hedge
ratio fell close to zero over the quarter.
Investment performance in Record's Active Forward Rate Bias
(FRB) product was positive during the three months to 31(st)
December 2015, and for an ungeared portfolio equated to a return of
0.39% (three months to 30(th) September 2015: return of -0.46%).
This compares to a 2.56% 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 of these two
strategies to some of the stronger performing currencies in the
quarter (mostly New Zealand and Australian dollar). 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
positive during the quarter and for an un-geared portfolio equated
to a quarterly return of 1.32% (three months to 30(th) September
2015: return of -6.53%). This positive performance was mainly
attributable to gains from the Brazilian real, Indonesian rupiah
and Turkish lira. Annualised performance since inception (30(th)
November 2009) for an un-geared portfolio was +0.47% p.a.
Investment performance in the Multi-Strategy product that uses
the Active FRB strategy was positive during the quarter as gains
from the Value, Active FRB, and Emerging Market components offset
the negative return from the Momentum component. For an un-geared
portfolio, the return was 0.26% over the quarter (three months to
30(th) September 2015: return of -0.87%). Annualised performance
since inception (31(st) July 2012) for an un-geared portfolio is
+1.00% 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 positive returns of 0.46% for
an ungeared portfolio during the three months to 31(st) December
2015 (three months to 30(th) September 2015: return of -0.95%).
4. AVERAGE FEE RATES, PERFORMANCE FEES AND PRODUCT DEVELOPMENT
During the quarter to 31(st) December 2015, fee rates for all
products remained broadly unchanged from the previous quarter. No
performance fees were earned in the quarter.
At the end of the quarter, Record entered into a licensing
agreement with WisdomTree Investments, Inc. to provide currency
signals that will be used to dynamically hedge currency exposures
within WisdomTree's rules-based index family. WisdomTree
Investments, Inc., through its subsidiaries in the U.S. and Europe
(collectively, "WisdomTree"), is an exchange-traded fund and
exchange-traded product sponsor and asset manager headquartered in
New York. Record is optimistic that this development will allow
dynamic hedging strategies to be accessible to a wider range of
investors than has been the case thus far.
5. CHIEF EXECUTIVE'S COMMENT
Chief Executive James Wood-Collins, commenting on business
development, said:
"The quarter saw tangible examples of central banks pursuing
their own domestic objectives, underlining the growing divergence
in international monetary policy. The Federal Reserve raised
interest rates for the first time in almost ten years whilst the
ECB continues to consider additional measures to drive rates
further downwards.
"The potential consequences of diverging monetary policy and
rising volatility, and their effect on currencies and clients'
portfolios, further reinforces the high levels of interest in
currency hedging and return-seeking opportunities for clients and
prospective clients.
"The increase in client numbers over the quarter reflects this
growing interest, and we are enthusiastic about the further
opportunities presented by our partnership with WisdomTree."
Record will announce its fourth quarter trading update on 22(nd)
April 2016.
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
Ollie Hoare
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.
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