TIDMREC
RNS Number : 1105N
Record PLC
21 October 2016
21 OCTOBER 2016
RECORD PLC
SECOND 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) September 2016 totalled $55.8
billion (30(th) June 2016: $53.0 billion).
AUME expressed in sterling as at 30(th) September 2016 totalled
GBP42.9 billion (30(th) June 2016: GBP39.7 billion).
1. AUME composition
AUME expressed in US dollars increased by 5.2% between 30(th)
June 2016 and 30(th) September 2016 and increased by 8.3% when
expressed in sterling. The composition of AUME by product was as
follows:
AUME $ billion
30(th) September 30(th) June
2016 2016
----------------- ------------
Dynamic Hedging 7.5 7.3
Passive Hedging 46.0 43.6
Currency for Return 2.1 1.9
----------------- ------------
Cash & Futures 0.2 0.2
----------------- ------------
Total 55.8 53.0
----------------- ------------
2. AUME Movement
Net client AUME flows in the three months to 30(th) September
2016 by product were as follows:
Net client AUME flows - $ billion
3 months to 3 months to
30(th) September 30(th) June
2016 2016
------------------ -------------
Dynamic Hedging - 0.1
Passive Hedging 1.3 (0.4)
Currency for Return 0.2 0.2
------------------ -------------
Cash & Futures - -
------------------ -------------
Total 1.5 (0.1)
------------------ -------------
Record had 61 clients at 30(th) September 2016 (30(th) June
2016: 61 clients).
Other than client flows, the factors which have had an aggregate
impact on AUME during the quarter of $1.3 billion, were as
follows:
(i) Movements in global stock and other markets: +$1.4bn
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: -$0.1bn
Exchange rate movements during the period affect the conversion
of non-US dollar mandate sizes into US dollar AUME.
3. Investment performance
For US Dynamic Hedging clients during the quarter, hedging
returns in the programmes were negative, as the US dollar weakened
against the basket of hedged currencies. Losses came primarily from
hedging the Japanese yen and the euro, where the Japanese yen
appreciated following a shift by the Bank of Japan to a tighter
monetary policy stance in September. The Dynamic Hedging programmes
performed as expected, with hedge ratios varying systematically in
line with US dollar movements, although costs were incurred in
adjusting the hedges.
For UK-based Dynamic Hedging clients the programmes controlled
hedging losses in response to sterling weakness against the
weighted basket of currencies. Negative returns came mostly from
hedging the US dollar and euro, however, losses were limited as
hedge ratios remained low over the period, and fell in line with
further sterling weakness in September.
Investment performance of the FTSE Currency FRB10 index (excess
return in sterling) during the three months to 30(th) September
2016 was +1.37% (three months to 30(th) June 2016: return of
+0.78%). The FTSE FRB10 Index Fund continued to track the index
closely, on a 1.8x--geared basis. By the end of the quarter, all
Record Active Forward Rate Bias portfolios had been transitioned to
the FTSE Currency FRB10 Index strategy as agreed with the
respective clients.
Record's Emerging Market product investment performance was
positive during the quarter and for an un-geared portfolio equated
to a quarterly return of +2.51% (three months to 30(th) June 2016:
return of +0.63%). Annualised performance since inception (30(th)
November 2009) for an un-geared portfolio was +1.38% p.a.
Investment performance in the Multi-Strategy product that used
the Active FRB strategy before switching to the FRB10 strategy, was
positive during the quarter as the Momentum and Emerging Market
components offset losses from the Value and Active FRB strategies.
For an un-geared portfolio, the return was +1.03% over the quarter
(three months to 30(th) June 2016: return of +1.48%). Annualised
performance since inception (31(st) July 2012) for an un-geared
portfolio is +1.56% p.a.
The Multi-Strategy product that has used the FTSE Currency FRB10
Index strategy throughout produced positive returns of +1.35% for
an ungeared portfolio during the three months to 30(th) September
2016 (three months to 30(th) June 2016: return of +1.79%) as
positive returns from the FRB10, Emerging Markets and Momentum
strategies more than offset losses from the Value component.
Annualised performance since inception (27(th) February 2015) for
an un-geared portfolio is +2.06% p.a.
4. AVERAGE FEE RATES, PERFORMANCE FEES AND PRODUCT DEVELOPMENT
During the quarter to 30(th) September 2016, fee rates for all
products remained broadly unchanged from the previous quarter. No
performance fees were earned in the quarter.
Our relationship with WisdomTree Investments, Inc. was extended
during the quarter to include signals that will be used to
dynamically hedge currency exposures within their newly-launched
Canadian rules-based index family.
5. CHIEF EXECUTIVE'S COMMENT
Chief Executive James Wood-Collins, commenting on business
development, said:
"Volatility continued during the quarter, albeit at less
dramatic levels than the previous quarter as the immediate
uncertainty caused by the EU referendum result on 24(th) June
receded. Sterling has continued to weaken against most major
currencies over the quarter, with a more significant decline since
quarter end following the government's announcement of a deadline
of 31(st) March 2017 for triggering the formal negotiations for
exiting the EU.
"The Bank of England's decision on 4(th) August to reduce the
base rate to 0.25% brought it into parity with the Federal Reserve
rate, and further suppressed expectations for increased monetary
policy divergence in the short-term. A consequence of such
ultra-low rate environments and continued Central Bank intervention
is a recovery in risk sentiment, as observed for example by more
recent and consistent flows into Emerging Market economies, as
investors seek out higher and more sustainable returns. In such
challenging conditions, we continue to be encouraged by the
performance of the Multi-Strategy product, which has returned 3.16%
for the six months ended 30(th) September 2016.
"We continue to see heightened investor awareness of the risks
and opportunities posed by currency fluctuations arising from
volatile market conditions. These concerns are seemingly set to
endure due to the continued geopolitical tensions across the globe,
the forthcoming presidential elections in the US, and the UK's exit
from the EU. Such awareness is provoking interest from investors
across a broad spectrum of Record products and we believe further
progress will be made in the current financial year."
Record will announce its half year results on 18(th) November
2016 and its third quarter trading update on 20(th) January
2017.
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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