TIDMREC
RNS Number : 2750T
Record PLC
17 July 2020
17 JULY 2020
RECORD PLC
FIRST QUARTER TRADING UPDATE
Growth in AUME of 8%, enhancement of distribution capability and
the launch of Record's Dynamic Macro Strategy
Record plc ("Record" or "the Company"), the specialist currency
manager, today announces a trading update for the three months
ended 30(th) June 2020.
Highlights
-- Assets under management equivalents ("AUME") expressed in US
dollars grew by 8% over the quarter to $63.3 billion as at 30(th)
June 2020
-- Management fee rates remained broadly unchanged during the
quarter, notwithstanding sustained fee pressure linked to Passive
Hedging
-- Appointment of third party distributor to expand US distribution capability
-- New business initiatives momentum with post quarter end
launch of Record's Dynamic Macro Strategy with plans advancing for
further product launches
Chief Executive of Record plc, Leslie Hill, commented:
"Following a challenging preceding quarter to 31(st) March
linked to the impact of covid-19, Record's AUME increased by 8% in
the quarter, including favourable underlying market movements of
$3.6 billion.
"One of our strategic priorities for the current financial year
is to enhance the capabilities of our marketing infrastructure to
facilitate our accelerated growth plans. During the quarter, the
Group appointed KPG Capital Partners LLC, a US-based third party
distributor with broad institutional reach across North America,
which will enhance Record's existing distribution capabilities in a
key market.
"While competition and fee pressure linked to our Passive
Hedging products persists, we continue to respond by enhancing our
products and service offerings. We have diversified our product
range with the launch of a new multi-asset offering, Dynamic Macro
Strategy and have made good progress in developing our
market-first, innovative Impact/ESG bond offering, although the
ultimate timing of any potential launch remains uncertain.
"Record continues to illustrate its resilience and to operate
effectively through the crisis, maintaining the strong
relationships with its high quality, institutional clients by
providing the highest levels of service and communication. This is
testament to the strong commitment and capability of our people,
and gives me confidence that we can succeed in achieving our goal
of continued growth that I outlined at our recent full year
results."
Further Trading Analysis
1. AUME composition
The Group's AUME expressed in US dollars as at 30(th) June 2020
totalled $63.3 billion (31(st) March 2020 totalled $58.6 billion),
and expressed in sterling totalled GBP51.2 billion (31(st) March
2020: GBP47.3 billion). AUME expressed in US dollars increased by
8% between 31(st) March 2020 and 30(th) June 2020 and by 8% when
expressed in sterling. The composition of AUME by product was as
follows:
AUME $ billion
30(th) June 2020 31(st) March 2020
----------------- ------------------
Dynamic Hedging 2.9 2.5
Passive Hedging 53.9 50.3
Currency for Return 3.1 2.6
Multi-Product 3.2 3.0
----------------- ------------------
Cash & Futures 0.2 0.2
----------------- ------------------
Total 63.3 58.6
----------------- ------------------
2. AUME Movement
Net client AUME flows in the three months to 30(th) June 2020 by
product were as follows:
Net client AUME flows - $ billion
3 months to 30(th) 3 months to 31(st)
June 2020 March 2020
------------------- -------------------
Dynamic Hedging 0.1 (0.1)
Passive Hedging (0.6) 1.1
Currency for Return 0.0 0.1
Multi-Product (0.0) (1.0)
------------------- -------------------
Cash & Futures - -
------------------- -------------------
Total (0.5) 0.1
------------------- -------------------
Record had 72 clients at 30(th) June 2020 (31(st) March 2020: 72
clients).
Other than client flows, the factors which have had an aggregate
impact on AUME during the quarter of +$5.2 billion were as
follows:
(i) Exchange rate movements and mandate volatility targeting: +$1.6 bn
Exchange rate movements during the period affect the conversion
of non-US dollar mandate sizes into US dollar AUME. In addition
certain Currency for Return mandates targeting a specific
volatility target may be scaled up or down.
(ii) Movements in global stock and other markets: +$3.6bn
Substantially all the Passive and Dynamic Hedging, and some of
the Multi-Product 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, hedging
returns in the programmes were negative, as the US dollar
depreciated versus the weighted basket of hedged currencies.
Record's Dynamic Macro Currency strategy which uses a mix of
both discretionary and systematic investment allocations saw
negative performance in the quarter, with investment performance
for the three months to 30(th) June 2020 of -3.39% (three months to
31(st) March 2020 was +6.92% (restated from +6.84%)).
Record's return-seeking strategies using more systematic
investment allocations saw positive performance in the quarter.
Investment performance of the FTSE Currency FRB10 index (excess
return in sterling) during the three months to 30(th) June 2020 was
+2.13% (three months to 31(st) March 2020 was -3.98%).
Record's Emerging Market product investment performance was
positive during the quarter and for an un-geared portfolio equated
to a quarterly return of +3.67% (three months to 31(st) March 2020
return of -8.76%). Annualised performance since inception (30(th)
November 2009) for an un-geared portfolio was +1.51% p.a.
Investment performance in the Multi-Strategy product that
comprises the FTSE Currency FRB10, Emerging Market, Value, Momentum
and Range Trading strategies was positive during the quarter. The
performance of Record's Multi-Strategy composite targeting 4%
volatility equated to a quarterly return of +0.35% (three months to
31(st) March 2020: return of -5.64%). Annualised performance since
inception (31(st) July 2012) for the portfolio was +0.62% p.a.
4. AVERAGE FEE RATES AND PERFORMANCE FEES
During the quarter to 30(th) June 2020, fee rates remained
broadly unchanged from the previous quarter. No performance fees
were earned in the quarter.
Since quarter end, one Passive Hedging client has elected to
change from a management fee only to a lower management fee with a
performance-related fee, effective from 1(st) July 2020.
Performance fees earned under this change will be disclosed in
quarterly Trading Updates in the ordinary course.
Record will announce its second quarter trading update on 19(th)
October 2020.
For further information, please contact:
Record plc Tel: +44 (0) 1753 852 222
Leslie Hill, Chief Executive Officer
Steve Cullen, Chief Finance Officer
Buchanan Tel: +44 (0) 20 7466 5163
Giles Stewart record@buchanan.uk.com
Victoria Hayns
Henry Wilson
Notes to Editors
Record plc
Founded in 1983, Record is an independent, specialist currency
manager and has established a market leading position in managing
Currency Hedging and Currency for Return for institutional
clients.
The Group has four principal reporting 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;
- Currency for Return, in which Record enters into currency
contracts for clients with the objective of generating positive
returns; and
- Multi-Product, where the client mandate includes combined
hedging and return-seeking objectives.
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 news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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