TIDMREC
RNS Number : 9176C
Record PLC
21 April 2017
RECORD PLC
FOURTH 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) March 2017 totalled $58.2 billion
(31(st) December 2016: $56.6 billion).
AUME expressed in sterling as at 31(st) March 2017 totalled
GBP46.6 billion (31(st) December 2016: GBP45.8 billion).
1. AUME composition
AUME expressed in US dollars increased by 2.8% between 31(st)
December 2016 and 31(st) March 2017 and increased by 1.7% when
expressed in sterling. The composition of AUME by product was as
follows:
AUME $ billion
------------------------------------------------------
31(st) March 31(st) December
2017 2016
--------------------- ------------- ----------------
Dynamic Hedging 6.3 6.1
Passive Hedging 48.2 46.3
Currency for Return 1.0 1.0
Multi-Product 2.5 3.0
--------------------- ------------- ----------------
Cash & Futures 0.2 0.2
--------------------- ------------- ----------------
Total 58.2 56.6
--------------------- ------------- ----------------
2. AUME Movement
Net client AUME flows in the three months to 31(st) March 2017
by product were as follows:
Net client AUME flows - $ billion
--------------------------------------------------------
3 months to 3 months to
31(st) March 31(st) December
2017 2016
--------------------- -------------- -----------------
Dynamic Hedging 0.1 0.5
Passive Hedging 0.3 1.3
Currency for Return - -
Multi-Product (0.9) 0.4
--------------------- -------------- -----------------
Cash & Futures - -
--------------------- -------------- -----------------
Total (0.5) 2.2
--------------------- -------------- -----------------
Record had 59 clients at 31(st) March 2017 (31(st) December
2016: 64 clients). During the quarter, six associated Passive
Hedging clients representing $0.6 billion AUME terminated, and one
client reduced its Multi-Product mandate by $0.9 billion. The
impact of these AUME reductions was offset by a new Passive Hedging
client (+$0.2 billion) and inflows of +$0.8 billion to existing
hedging mandates. Record has been notified of the termination of a
Passive Hedging mandate of $1.2 billion expected during the current
quarter.
Other than client flows, the factors which have had an aggregate
impact on AUME during the quarter of +$2.1 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 and Multi-Product mandates, are linked to
stock and other market levels. Consequently AUME may be affected by
movements in these markets.
(ii) Exchange rate movements: +$0.7bn
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 weighted basket of hedged currencies. Losses came
primarily from hedging the Japanese yen and the euro. The Dynamic
hedging programmes performed as intended, and hedge ratios fell
through the period in line with US dollar weakness, allowing US
investors to capture gains in the underlying overseas
exposures.
For UK-based Dynamic Hedging clients, hedging returns were
negative over the quarter. Although sterling strengthened overall
against the basket of hedged currencies it followed a volatile path
in doing so, which led to elevated costs associated with varying
the hedge ratios. Losses came primarily from hedging the US
dollar.
Investment performance of the FTSE Currency FRB10 index (excess
return in sterling) during the three months to 31(st) March 2017
was +0.27% (three months to 31(st) December 2016: return of
+1.96%). 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 +2.85% (three months to 31(st) December
2016: return of +4.02%). Annualised performance since inception
(30(th) November 2009) for an un-geared portfolio is +2.22%
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 Markets strategies more than
offset losses from the Momentum and Value components. For an
un-geared portfolio, the return was +0.64% over the quarter (three
months to 31(st) December 2016: return of +1.11%). Annualised
performance since inception (31(st) July 2012) for Record's
longest-standing Multi-Strategy mandate on un-geared portfolio
basis is +1.82% p.a.
4. AVERAGE FEE RATES AND PERFORMANCE FEES
During the quarter to 31(st) March 2017, 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:
"Net flows into hedging mandates were positive by $0.4 billion
in the quarter despite the previously announced termination of
Passive Hedging clients representing $0.6 billion. A reduction of
$0.9 billion from a Multi-Product mandate this quarter offset
inflows of $0.4 billion in the prior quarter, underlining the
variable nature of certain mandates. The continued growth of AUME
over the financial year, by +10% and +26% in US dollar and sterling
terms respectively, has taken AUME to its highest level in Record's
history.
"The environment of political uncertainty that has prevailed
since the middle of 2016 looks set to continue. European elections
are now at the forefront of investors' minds, as is continued
uncertainty over the nature of the UK's departure from the EU, and
US political and economic policy. Modest divergence in monetary
policy has continued with the Federal Reserve's decision in March
to raise the federal funds target range by a further 0.25%.
"This backdrop continues to support discussions on how Record is
able to assist clients and potential clients in achieving their
investment objectives. As a result good engagement continues across
Record's diversified range of strategies."
Record will announce its financial results for the year ended
31(st) March 2017 on 16(th) June 2017 and its first quarter trading
update on 21(st) July 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 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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