TIDMREC
RNS Number : 9228E
Record PLC
22 July 2016
22 JULY 2016
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 2016 totalled $53.0 billion
(31(st) March 2016: $53.7 billion).
AUME expressed in sterling as at 30(th) June 2016 totalled
GBP39.7 billion (31(st) March 2016: GBP37.4 billion). Exchange rate
movements during the period materially affected the conversion of
non-sterling mandate sizes into sterling AUME with an impact of
+GBP1.8 billion.
1. AUME composition
AUME expressed in US dollars decreased by 1.3% between 31(st)
March 2016 and 30(th) June 2016 and increased by 6.1% when
expressed in sterling. The composition of AUME by product was as
follows:
AUME $ billion
------------------------------------------------------------
30(th) June 2016 31(st) March 2016
--------------------- ----------------- ------------------
Dynamic Hedging 7.3 7.9
Passive Hedging 43.6 43.8
Currency for Return 1.9 1.8
--------------------- ----------------- ------------------
Cash & Futures 0.2 0.2
--------------------- ----------------- ------------------
Total 53.0 53.7
--------------------- ----------------- ------------------
2. AUME Movement
Net client AUME flows in the three months to 30(th) June 2016 by
product were as follows:
Net client AUME flows - $ billion
---------------------------------------------------------------
3 months to 30(th) 3 months to 31(st)
June 2016 March 2016
--------------------- ------------------- -------------------
Dynamic Hedging 0.1 (0.4)
Passive Hedging (0.4) (0.1)
Currency for Return 0.2 (1.0)
--------------------- ------------------- -------------------
Cash & Futures - -
--------------------- ------------------- -------------------
Total (0.1) (1.5)
--------------------- ------------------- -------------------
Record had 61 clients at 30(th) June 2016 (31(st) March 2016: 58
clients).
Other than client flows, the factors which have had an aggregate
impact on AUME during the quarter of -$0.6 billion, were as
follows:
(i) Exchange rate movements: -$1.5bn
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: +$0.9bn
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.
3. Investment performance
For US Dynamic Hedging clients during the quarter, our
programmes' performance was negative, as the US dollar weakened
against the basket of hedged currencies. Losses came from hedging
the Japanese yen, which appreciated substantially in the wake of
the UK's decision to leave the EU, but these were limited as hedge
ratios fell in line with yen strength. The euro range-traded
against the dollar before depreciating marginally at the end of the
quarter leading to negative returns from hedging the euro.
For UK-based Dynamic Hedging clients the programmes adjusted
hedge ratios in line with fluctuations of the pound ahead of the EU
referendum vote. As a precautionary measure and in consultation
with clients, the level of activity on these programmes was reduced
shortly before the referendum to limit clients' exposure to
volatile market conditions, ensuring programmes performed in line
with their respective benchmarks during this period.
Investment performance in Record's Active Forward Rate Bias
(FRB) product was negative during the three months to 30(th) June
2016, and for an ungeared portfolio equated to a return of -1.92%
(three months to 31(st) March 2016: return of -1.40%). This
compares to a 0.78% 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 more volatile currencies in the quarter.
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 0.63% (three months to 31(st) March 2016:
return of 3.46%). This performance was mainly attributable to gains
in the Brazilian real, Russian rouble and Colombian peso.
Annualised performance since inception (30(th) November 2009) for
an un-geared portfolio was +1.05% p.a.
Investment performance in the Multi-Strategy product that uses
the Active FRB strategy was positive during the quarter as the
Value, Momentum and Emerging Market components offset losses from
the Active FRB strategy. For an un-geared portfolio, the return was
1.48% over the quarter (three months to 31(st) March 2016: return
of 0.53%). Annualised performance since inception (31(st) July
2012) for an un-geared portfolio is +1.39% p.a.
The Multi-Strategy product that uses the FTSE Currency FRB10
Index strategy instead of the Active FRB strategy produced positive
returns of 1.79% for an ungeared portfolio during the three months
to 30(th) June 2016 (three months to 31(st) March 2016: return of
1.04%) as all four strategies contributed positively to investment
performance. Annualised performance since inception (27(th)
February 2015) for an un-geared portfolio is 1.43% p.a.
4. AVERAGE FEE RATES AND PERFORMANCE FEES
During the quarter to 30(th) June 2016, 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:
"As widely anticipated, volatility increased over the quarter as
a consequence of fluctuating market expectations prior to the EU
referendum, further heightened in the last week of the quarter by
the seemingly-unexpected 'Leave' vote. Although the consequent
decline in sterling has been dramatic, the FX market continued to
function even in the immediate aftermath. Market-wide transaction
volumes were exceptionally high, albeit with poorer liquidity and
wider spreads than normal.
"The protective measures we put in place prior to the
referendum, of anticipating periods of elevated volatility and
managing the impact on clients' portfolios, served their purpose by
limiting the increase in trading costs and managing liquidity
requirements for our clients.
"Uncertainty seems set to continue at least over the short-term
and will likely continue to suppress expectations for monetary
policy divergence. However, in the current environment, it is
pleasing to note the encouraging performance of the Multi-Strategy
product since the start of the year.
"We continue to see a wide divergence of views amongst investors
as to their preferences in managing currency risk and opportunity.
Our diversified range of strategies, with the ability to tailor
these to specific client objectives, means we are well placed to
assist clients. Engagement with investors continues, which we
believe will lead to further progress being made in the current
financial year."
Record will announce its second quarter trading update on 21(st)
October 2016.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the
publication of this announcement via Regulatory Information Service
("RIS"), this inside information is now considered to be in the
public domain.
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.
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
END
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