Record upbeat after third quarter performance

Specialist currency manager Record announced on Friday that its assets under management equivalents (AUME) at the end of its third quarter on 31 December totalled $63.9bn, up from $61.2bn at the start of the quarter.

The company said AUME expressed in sterling as at 31 December totalled £47.3bn, rising from £45.6bn three months earlier.

Record said it had 60 clients at period end - an increase of one client over the quarter.

Other than client flows, the factors which had an aggregate impact on AUME during the quarter of $1.3bn included a $1.4bn positive movement in global stocks and other markets, and a $0.1bn negative movement in exchange rates.

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.

The company said losses came primarily from hedging the euro.

The dynamic hedging programmes performed as intended, with hedge ratios varying systematically in line with US dollar movements.

“Although the US dollar followed an unstable path, which led to elevated costs associated with varying hedge ratios, low hedge ratios allowed US investors to capture currency gains in the underlying overseas exposures,” Record’s board explained in its statement.

Investment performance of the FTSE Currency FRB10 index - excess return in sterling - during the three months was -0.09%, swinging from a return of +0.06% in the quarter immediately prior.

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 1.29%, up from 0.60%.

Annualised performance since inception on 30 November 2009 for an un-geared portfolio was 2.23% per annum.

Investment performance in the multi-strategy product that comprised the FTSE Currency FRB10, Emerging Market, Value and Momentum strategies was positive during the quarter as gains from Value and Emerging Markets offset losses in the Momentum and FRB10 components, the board explained.

For an un-geared portfolio, the return was 0.30% over the quarter - up from 0.08%.

Annualised performance since inception on 31 July 2012 for Record's longest-standing Multi-Strategy mandate on un-geared portfolio basis was 1.51% per annum.

During the quarter to 31 December, fee rates for all products remained “broadly unchanged” from the previous quarter, the board said, with no performance fees earned in the quarter.

“This quarter saw further growth in AUME and in client numbers, with growth in particular from existing client mandates as well as new business,” said Record chief executive James Wood-Collins.

“A busy quarter included final preparations for new regulatory requirements under EMIR and MiFID II.”

Wood-Collins said the reversal by European regulators of the imposition of mandatory variation margin achieved the outcome which Record had long advocated, even though “significant resources” had been committed in the meantime to preparing for the change.

“The scope of the MiFID II changes was substantial, requiring significant resources and system enhancements and it's pleasing to note that Record achieved full operational readiness by the 3 January 2018 deadline.

"Volatility in currency markets linked to political and economic uncertainty continues to create opportunities for engagement with existing and potential clients on risk management, return-seeking and combined strategies.

“We remain confident of making further progress in the rest of the financial year and through to the next financial year.”

Record’s board said it would announce its fourth quarter trading update on 20 April.