Interim Management Statement

RNS Number : 6102Z

Record PLC

18 January 2011

 



RECORD PLC

THIRD QUARTER TRADING UPDATE

Record plc ("Record" or the "Company"), the specialist currency manager, announces today that as at 31^st December 2010 the Group's assets under management equivalents ("AuME") totalled $31.4 billion (30^th September 2010: $30.8 billion). 

AuME expressed in Sterling as at 31^st December 2010 totalled £20.1 billion (30^th September 2010: £19.5 billion).

1      AuME composition

Record saw an increase in AuME when expressed in both US Dollars and Sterling during the period between 30^th September 2010 and 31^st December 2010.  The composition of AuME at 31^st December 2010 was as follows:

AuME $ bn
	31st December 2010		30th September 2010
Currency for Return
Segregated	2.7		2.1
Pooled	1.3		1.9
Currency for Return Sub Total		4.0		4.0
Dynamic Hedging		11.7		11.5
Passive Hedging		15.3		14.8
Cash & Futures		0.4		0.5
Total		31.4		30.8

2      AuME MOVEMENT

Net client AuME flows in the three months to 31^st December 2010 by product were as follows:

Net client AuME flows  - $ bn
	3 mths to 31st December 2010		3 mths to 30th September 2010
Currency for Return
Segregated	0.5		(0.6)
Pooled	(0.6)		(0.7)
Currency for Return Sub Total		(0.1)		(1.3)
Dynamic Hedging		-		-
Passive Hedging		0.2		0.6
Cash & Futures		(0.1)		(0.2)
Total		0.0		(0.9)

The inflow of $0.5 billion into segregated Currency for Return mandates represents an increase in mandate size by an existing client for which Record implements a bespoke return seeking programme.

Record had 47 clients at 31^st December 2010, compared to 57 at 30^th September 2010.

The factors other than client flows which impacted AuME during the quarter, totalling $0.6 billion, were:

(i)	Exchange rate movements:	$0.4bn
	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:	$0.2bn
	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 is affected by movements in these markets;
(iii)	Pooled fund investment performance:	$0.0bn
	Investment returns are compounded on a geared basis into the AuME of the pooled funds and so impact AuME.

Investment performance in Record's established Currency for Return product was negative during the quarter ending 31^st December 2010 and for an un-geared portfolio equated to a negative return of -1.01% over the quarter (6 months to 30^th September 2010: negative return of -2.49%).  This compares to a positive return in the quarter of 1.20% for the FTSE Currency FRB10 index (excess return in Sterling), driven by the index's greater exposure to less liquid currencies and absence of risk management costs. 

3          AVERAGE FEE RATES

During the quarter to 31^st December 2010, fee rates for both Passive and Dynamic Hedging were maintained.  Whilst individual client fee rates remained unaltered for both pooled and segregated Currency for Return clients, the change in business mix resulted in a marginal reduction in average management fee rates. 

4          CHIEF EXECUTIVE'S COMMENT

Chief Executive James Wood-Collins, commenting on trading, said "Our Dynamic Hedging product continues to perform as expected by allowing our clients to benefit from foreign currency strength and protecting them from foreign currency weakness.  Whilst it is clearly disappointing not to have won any new mandates in the first nine months, we have seen requests for proposals (RFPs) for Dynamic Hedging and are hopeful that there could be further client additions before the middle of 2011.  We have also seen interest in passive hedging and are pleased to have added additional AuME in the quarter.

For the Currency for Return product, investment performance in the first nine months has been negative with an overall return of our Alpha Composite of -3.47%.  The continuing poor performance and the overall three year negative performance has led to further client redemptions in the last quarter.  We anticipate further redemptions in the Currency for Return product before the end of the financial year.  We remain confident in the long-term performance and committed to the long-term investment strategy for this product.  During this challenging period we have continued to communicate the investment philosophy and long term track record with investment consultants and our clients.   

In December we launched our first index tracking product, the FTSE FRB10 Index fund, and our first emerging market fund, the Emerging Market Currency fund.  Both these products are being marketed to new and existing clients and we are hopeful that we can generate external subscriptions by the middle of 2011.  We have been encouraged by the reception that the new funds are having from investment consultants."

Record will announce its fourth quarter trading update on 15^th April 2011.

For further information, please contact:

Record plc                                                                             Tel: [phone]

Neil Record

James Wood-Collins

Paul Sheriff

MHP                                                                                         Tel: [phone]

Nick Denton

John Olsen

Vicky Watkins

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 Dynamic Hedging and Currency for Return for institutional clients.

The Group has three principal product lines:

-    Currency for Return, formerly known as Absolute Return, in which Record enters into currency contracts for clients with the objective of generating positive returns;

-    Dynamic Hedging, formerly known as Active 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; and

-    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.

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. 

 

END

 

 

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