TIDMREC
RNS Number : 5273M
Record PLC
22 January 2021
22 January 2021
RECORD PLC
('Record' or the 'Company')
THIRD QUARTER TRADING UPDATE
Growth in AUME of 13%, including net inflows of $5.1 billion
Record plc, the specialist currency manager, today announces a
trading update for the three months ended 31(st) December 2020.
Highlights
-- Assets under management equivalents ("AUME") expressed in US
dollars grew by 13% over the quarter to $74.6 billion as at 31(st)
December 2020, exceeding $70 billion for the first time in Record's
history.
-- Diversification of AUME inflows in the quarter across our
higher-margin Dynamic Hedging and Multi-Product strategies of $4.7
billion and $1.2 billion respectively.
-- Management fee rates remained broadly unchanged during the quarter.
Leslie Hill, Chief Executive of Record plc, commented :
"Our third quarter saw AUME grow by 13%, including net inflows
across Dynamic Hedging ($4.7 billion) and Multi-Product ($1.2
billion). These strong inflows have also increased AUME in our
higher-margin products helping to diversify revenues across our
existing product range and leading to an aggregate AUME exceeding
$70 billion for the first time in our 37 year history.
"We continue to make good progress on developing our
market-first Currency Impact/ESG bond offering, which we expect to
launch before the end of the financial year and to deliver further
diversification to our future revenue streams.
"Our business continues to grow and to prove its resilience
through challenging market conditions, and we remain focused on
maintaining this momentum whilst achieving the efficiencies and
scalability offered through our ongoing investment in technology.
We are confident that the benefits flowing from the delivery of
such improvements will begin to be seen over the final quarter, and
more fully early into the next financial year."
Further Trading Analysis
1. AUME composition
The Group's AUME expressed in US dollars as at 31(st) December
2020 totalled $74.6 billion (30(th) September 2020: $65.9 billion),
and expressed in sterling totalled GBP54.6 billion (30(th)
September 2020: GBP51.0 billion). AUME expressed in US dollars
increased by 13% between 30(th) September 2020 and 31(st) December
2020 and by 7% when expressed in sterling. The composition of AUME
by product was as follows:
AUME $ billion
31(st) December 30(th) September
2020 2020
---------------- -----------------
Dynamic Hedging 8.0 3.2
Passive Hedging 57.9 55.6
Currency for Return 3.6 3.4
Multi-Product 4.9 3.5
---------------- -----------------
Cash & Futures 0.2 0.2
---------------- -----------------
Total 74.6 65.9
---------------- -----------------
2. AUME Movement
Net client AUME flows in the three months to 31(st) December
2020 by product were as follows:
Net client AUME flows - $ billion
3 months to 3 months to
31(st) December 30(th) September
2020 2020
----------------- ------------------
Dynamic Hedging 4.7 0.4
Passive Hedging (0.8) (0.2)
Currency for Return 0.0 0.0
Multi-Product 1.2 0.0
----------------- ------------------
Cash & Futures 0.0 0.0
----------------- ------------------
Total 5.1 0.2
----------------- ------------------
Record had 79 clients at 31(st) December 2020 (30(th) September
2020: 74 clients). The significant increase in Dynamic Hedging
inflows versus the prior period reflects the start of the new
mandate announced on 21 September 2020. The Multi-Product net
inflows of $1.2 billion includes an increase of approximately $0.4
billion from a certain tactical bespoke mandate that is expected to
be temporary in nature. The remaining $0.8 billion inflow to
Multi-Product AUME represents another separate tactical mandate,
the revenue from which was previously reported as 'Other investment
services income', rather than as part of AUME. This has now been
reclassified and will be reported under the Multi-Product category
within net client AUME flows for the duration of the mandate.
Approximately $0.3 billion of this mandate will be more variable in
nature. Both mandates generate fees consistent with Record's other
Multi-Product mandates.
Other than client flows, the factors which have had an aggregate
positive impact on AUME during the quarter of +$3.7 billion were as
follows:
(i) Exchange rate movements and mandate volatility targeting:
+$2.4 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: +$1.2bn
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 driven
by positive vaccine news and a market-friendly US election outcome
which improved the global economic outlook.
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 31(st) December 2020 of -2.68% (30(th)
September 2020: -0.41%).
Investment performance of the FTSE Currency FRB10 index (excess
return in sterling) was positive during the three months to 31(st)
December 2020 at +0.61% (30(th) September 2020: -0.87%).
Record's Emerging Market product investment performance was
positive during the quarter and for an un-geared portfolio equated
to a quarterly return of +3.48% (30(th) September 2020: -2.12%).
Annualised performance since inception (30(th) November 2009) for
an un-geared portfolio was +1.56% 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 +3.64% (30(th)
September 2020: -2.20%). Annualised performance since inception
(31(st) July 2012) for the portfolio was +0.75% p.a.
4. AVERAGE FEE RATES AND PERFORMANCE FEES
During the quarter to 31(st) December 2020, fee rates remained
broadly unchanged from the previous quarter. No performance fees
were earned in the quarter.
Record will announce its fourth quarter trading update on 23(rd)
April 2021 and its financial results for the year ending 31(st)
March 2021 on 17(th) June 2021.
-Ends -
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 5000
Giles Stewart
record@buchanan.uk.com
Henry Wilson
George Beale
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.
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