TIDMREC
RNS Number : 8735P
Record PLC
22 October 2021
22 October 2021
RECORD PLC
('Record' or the 'Company')
SECOND QUARTER TRADING UPDATE
Record plc, the specialist currency and derivatives manager, is
pleased to announce a positive trading update for the three months
ended 30 September 2021 ("Q2-2022" or the "period").
Highlights
-- Assets under management equivalents ("AUME") as at 30
September 2021 totalled US$84.1 billion (30 June 2021: US$84.5
billion)
-- Growth of US$75 million in the new Record EM Sustainable Finance Fund
-- Net inflows of US$600 million in the higher-margin Dynamic Hedging product
-- New product development in collaboration with new EU-based
partner, anticipated launch by the end of the calendar year
-- Client numbers grew by 2% during the period
-- New London-based office opened in mid-October
Leslie Hill, Chief Executive of Record plc, commented :
"Our focus continues on the diversification of our products and
revenue streams. In this respect, building strategic partnerships
remains core to our growth strategy and we are excited to be
working in collaboration with a new EU partner to develop an
investment product focused on the German institutional market,
which we hope to launch by the end of the calendar year. This will
add further diversification to our product range and broadens our
expertise in financial derivatives outside of pure currency.
"It is pleasing to report net inflows of US$600 million into
Dynamic Hedging and US$100 million into Currency for Return, both
of which provide further diversification and scale to our higher
margin client base.
"We continue to work hard on implementing our growth and
modernisation strategy across our business and, as expected have
now started to see the financial impact through both increased
revenues and operating margins. I look forward to providing a
further update to shareholders at our interim results on 23
November."
Trading Analysis
1. AUME composition
The Group's AUME as at 30 September 2021 totalled US$84.1
billion (30 June 2021: US$84.5 billion), and expressed in sterling
totalled GBP62.4 billion (30 June 2021: GBP61.2 billion). AUME
expressed in US dollars saw a negligible percentage decrease
between 30 June 2021 and 30 September 2021, and an increase of 2%
when expressed in sterling. The composition of AUME by product was
as follows:
AUME US$ billion
30 September 2021 30 June 2021
------------------ -------------
Dynamic Hedging 10.3 9.8
Passive Hedging 63.0 63.8
Currency for Return 5.4 5.4
Multi-Product 5.2 5.3
------------------ -------------
Cash & Futures 0.2 0.2
------------------ -------------
Total 84.1 84.5
------------------ -------------
2. AUME Movement
Net client AUME flows in the three months to 30 September 2021
by product were as follows:
Net client AUME flows - US$ billion
3 months to 3 months to
30 September 2021 30 June 2021
------------------- --------------
Dynamic Hedging 0.6 0.0
Passive Hedging (0.6) 0.9
Currency for Return 0.1 0.9
Multi-Product 0.0 0.0
------------------- --------------
Cash & Futures 0.0 0.0
------------------- --------------
Total 0.1 1.8
------------------- --------------
Record had 89 clients at 30 September 2021 (30 June 2021: 87
clients).
Other than client flows, the factors which have had an aggregate
negative impact on AUME during the quarter of -$0.5 billion were as
follows:
(i) Exchange rate movements and mandate volatility targeting:
-$1.0 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: +$0.5bn
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 positive as the US dollar
appreciated versus the weighted basket of hedged currencies. The
value added in the quarter for a representative account was +0.36%
(30 June 2021: -0.44%), with annualised performance since inception
(April 2009) of +0.43%.
For Tenor Managed Passive Hedging clients returns were negative
during the quarter, with the respective benchmark hedging
structures outperforming the product. The FX forward market has
seen a further reduction in volatility of interest rate
differentials given the sustained high level of intervention from
central banks and through government stimulus packages globally.
Low volatility as a result of significant injections of US dollar
liquidity into financial markets reduced the broader opportunity
set during the period. The value added in the quarter relative to a
fixed tenor benchmark for a Tenor Managed Passive Hedging programme
for a representative account was -0.01% (30 June 2021: -0.004%),
with annualised performance since inception (October 2014) of
+0.08% 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 +0.81% (30 June 2021:
0.88%). Annualised performance since inception (31 July 2012) for
the portfolio was +1.00% p.a.
The Record EM Sustainable Finance Fund performed well when
compared to major market EM sovereign bond indices, returning
-0.42% in the quarter (JPM Government Bond Index EM Global
Diversified ("JPM GBIEMGD"): -3.1%) [1] . The overweight exposures
in high-yielding currencies of Eastern Europe and Central and
Eastern Asia contributed positively to the outperformance. The
return from short selling a diversified basket of developed market
currencies to fund the long exposures in emerging market currencies
also added positively to the fund's outperformance in the quarter.
Exposure to currencies in Latin America performed poorly in the
period following growing local political and fiscal uncertainties,
inflationary pressures, concerns over a slowdown in global growth,
in particular in China, and volatile commodity prices. The
USD-denominated bonds in the portfolio closed slightly weaker on
the back of increasing yields in the US market as the Federal
Reserve indicated that tapering could start as early as November
2021 amid rising price pressures and strong growth momentum.
4. AVERAGE FEE RATES AND PERFORMANCE FEES
During Q2-2022, fee rates remained broadly unchanged from the
previous quarter. No performance fees were earned in the
quarter.
Record will announce its half year results on 23 November 2021
and its third quarter trading update on 21 January 2022.
-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
Victoria Hayns
Henry Wilson
George Beale
Notes to Editors
Record plc
Founded in 1983, Record is an independent, market-leading
specialist currency and derivatives manager with over 38 years of
experience which has allowed us to develop a deep and fundamental
understanding of the risk and reward opportunities within those
markets.
Our range of products typically assist our clients in achieving
either their risk-reduction (via Currency Hedging) or
return-seeking (via Currency for Return) objectives.
Our clients are largely institutions, including pension funds,
charities, foundations, endowments, and family offices, as well as
other asset managers and corporates.
Record (LSE: REC) was admitted to trading on the London Stock
Exchange on 3 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.
[1] Source: J.P. Morgan
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