TIDMREC
RNS Number : 6685U
Record PLC
20 January 2017
RECORD PLC
THIRD 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 31(st) December 2016 totalled $56.6
billion (30(th) September 2016: $55.0 billion).
AUME expressed in sterling as at 31(st) December 2016 totalled
GBP45.8 billion (30(th) September 2016: GBP42.4 billion).
1. AUME composition
AUME expressed in US dollars increased by 2.9% between 30(th)
September 2016 and 31(st) December 2016 and increased by 8.0% when
expressed in sterling. The composition of AUME by product was as
follows:
AUME $ billion
----------------------------------------------------------
31(st) December 30(th) September
2016 2016
--------------------- ---------------- -----------------
Dynamic Hedging 6.1 5.7
Passive Hedging 46.3 45.6
Currency for Return 1.0 0.9
Multi-Product 3.0 2.6
--------------------- ---------------- -----------------
Cash & Futures 0.2 0.2
--------------------- ---------------- -----------------
Total 56.6 55.0
--------------------- ---------------- -----------------
2. AUME Movement
Net client AUME flows in the three months to 31(st) December
2016 by product were as follows:
Net client AUME flows - $ billion
------------------------------------------------------------
3 months to 3 months to
31(st) December 30(th) September
2016 2016
--------------------- ----------------- ------------------
Dynamic Hedging 0.5 -
Passive Hedging 1.3 1.3
Currency for Return - 0.2
Multi-Product 0.4 -
--------------------- ----------------- ------------------
Cash & Futures - -
--------------------- ----------------- ------------------
Total 2.2 1.5
--------------------- ----------------- ------------------
Record had 64 clients at 31(st) December 2016 (30(th) September
2016: 61 clients). Since the end of the quarter, notice has been
served to terminate mandates in respect of six associated Passive
Hedging clients representing $0.7 billion AUME with effect from
30(th) January 2017, and also in respect of one Dynamic Hedging
client representing $0.3 billion AUME, with timing to be
determined.
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: -$2.4bn
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: +$1.8bn
Substantially all the Passive and Dynamic Hedging, and some of
the Currency for Return and 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
strengthened against the weighted basket of the respective hedged
currencies. The largest gain came from hedging the Japanese yen, as
hedge ratios rose materially from a low starting point in line with
substantial yen weakness. Gains also came from hedging the euro,
where hedge ratios increased systematically in line with the broad
US dollar strengthening over the quarter.
For UK-based Dynamic Hedging clients the programmes performed as
expected, controlling hedging losses in response to sterling
weakness against the weighted basket of currencies. Negative
returns came primarily from hedging the US dollar, however, losses
were limited as the hedge ratios began the period close to zero
during sterling's decline in October and then rose and fell
accordingly to reflect sterling strength and weakness in November
and December, respectively.
Investment performance of the FTSE Currency FRB10 index (excess
return in sterling) during the three months to 31(st) December 2016
was +1.96% (three months to 30(th) September 2016: return of
+1.37%). 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 +4.02% (three months to 30(th) September
2016: return of +2.51%). Annualised performance since inception
(30(th) November 2009) for an un-geared portfolio was +1.89%
p.a.
Investment performance in the Multi-Strategy product that
comprises the FTSE Currency FRB10, Emerging Market, Value and
Momentum strategies was positive during the quarter as positive
returns from the FRB10 and Emerging Market strategies more than
offset losses from the Momentum and Value components. For an
un-geared portfolio, the return was 1.11% over the quarter (three
months to 30(th) September 2016: return of 1.35%). Annualised
performance since inception (31(st) July 2012) for Record's
longest-standing Multi-Strategy mandate on an un-geared portfolio
basis is +1.76% p.a.
4. AVERAGE FEE RATES, PERFORMANCE FEES AND PRODUCT DEVELOPMENT
During the quarter to 31(st) December 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:
"US dollar strength dominated the second half of the quarter
following the seemingly-unexpected result of the US presidential
election in early November, with President-elect Trump's economic
ambitions being seen as supportive of the dollar.
"The more divergent paths now appearing between the policies of
major Central Banks was underlined by the Federal Reserve's
decision to raise the base rate by 0.25% in December, contrasting
with the ECB decision in December to extend the QE programme and by
the Bank of England's decision to reduce the base rate in the
preceding quarter.
"The recent referendum result in Italy, plus forthcoming
elections in the Netherlands, France and later in 2017 Germany,
continue to remind investors of the ongoing event risk in foreign
exchange markets.
"Against this backdrop, it's pleasing to report flows into
multi-product and hedging products during the quarter. Such
volatility and uncertainty in markets continues to provide
opportunities for Record to discuss both its return-seeking and
risk-reducing products with current and potential clients."
Record will announce its fourth quarter trading update on 21(st)
April 2017.
For further information, please contact:
Record plc Tel: +44 (0) 1753
James Wood-Collins, Chief 852 222
Executive Officer
Steve Cullen, Chief Finance
Officer
MHP Communications Tel: +44 (0)
Nick Denton 20 3128 8771
Ollie Hoare record@mhpc.com
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 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 company news service from the London Stock Exchange
END
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