17th Jan 2014 09:15
LONDON (Alliance News) - Currency manager Record PLC Friday said its assets under management equivalents grew by 36% over the third-quarter, driven by demand for its passive hedging products, adding that new contracts should add GBP1.6 million to pretax profits on a yearly basis.
In a statement, Windsor-based Record - which makes money by designing and implementing risk-reducing currency hedges or return strategies for clients such as pension funds, charities and corporates - said its assets under management equivalents grew to USD51.1 billion over the three months to December 31, boosted by a USD12.0 billion net client inflow over the quarter.
Substantially all of that net inflow was down to its passive hedging product, which attracted USD12.2 billion, significantly outweighing the USD300 million outflow from its dynamic hedging products.
Chief Executive James Wood-Collins said the rise in assets under management equivalents was down to recent contract success.
"The Passive Hedging mandate announced on June 3, 2013 commenced during the quarter, and in total Passive Hedging mandates of approximately USD12 billion in assets under management equivalents have started since September 30, 2013. These mandates are expected to generate approximately GBP2.3 million in annualised management fees, with an on-going annualised impact on pretax profits of approximately GBP1.6 million," Wood-Collins said in a statement.
Record refers to its assets under management as "equivalents" because it doesn't doesn't actually manage the underlying assets it is hedging. Instead, it designs and implements methods of managing currency against foreign exchange movements.
Earlier this week, the currency manager said it had been awarded, subject to contract, a new dynamic hedging mandate for assets under management equivalents of about USD600 million.
Wood-Collins said Record was still in talks with prospective clients and investment consultants in North America, UK and Switzerland, who have expressed an interest "across our product range".
The assets under management equivalents were also bolstered by a positive USD800 million exchange rate movements and a positive USD600 million movement in stock and other market levels. Almost all of Record's passive and dynamic hedging is linked to stock and other market levels.
Record, which in November cut client fees in order to fend off and beat rivals in an increasingly competitive market, reiterated that it is aiming to boost volumes at a rate that will "more than compensate" for the resulting reduction in revenue margins of its November fee cut.
Record will announce its fourth-quarter trading update on April 23.
Record shares were Friday quoted at 36.49 pence, up 0.62 pence, or 1.7%.
By Samuel Agini; [email protected]; @samuelagini
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