22nd Jul 2016 07:35
LONDON (Alliance News) - Record PLC on Friday said protective measures it put in place ahead of Brexit referendum helped manage the hit to its clients' portfolios from market volatility, and said it expects further progress in its current year.
The specialist currency manager said its assets under management equivalents fell in the quarter to end-June to USD53.0 billion from USD53.7 billion at the end of March, although in sterling terms they rose to GBP39.7 billion from GBP37.4 billion.
Record said that for its US Dynamic Hedging clients, its programmes performance was negative as the dollar weakened against the basket of hedged currencies. Losses came from hedging the Japanese yen, which appreciated substantially in the wake of the UK's decision to leave the European Union.
For UK-based Dynamic Hedging clients, the programmes adjusted hedge ratios in line with fluctuations of the pound ahead of the referendum vote. Record said that, as a precautionary measure, the level of activity on these programmes was reduced shortly before the vote to limit clients exposure to volatile market conditions.
"As widely anticipated, volatility increased over the quarter as a consequence of fluctuating market expectations prior to the EU referendum, further heightened in the last week of the quarter by the seemingly-unexpected 'Leave' vote. Although the consequent decline in sterling has been dramatic, the FX market continued to function even in the immediate aftermath. Market-wide transaction volumes were exceptionally high, albeit with poorer liquidity and wider spreads than normal," said Chief Executive James Wood-Collins in a statement.
However, Wood-Collins said that "uncertainty seems set to continue at least over the short-term", which will "likely continue to suppress expectations for monetary policy divergence".
Record's Wood-Collins also noted an encouraging performance from its Multi Strategy product since the start of the year.
"We continue to see a wide divergence of views amongst investors as to their preferences in managing currency risk and opportunity. Our diversified range of strategies, with the ability to tailor these to specific client objectives, means we are well placed to assist clients. Engagement with investors continues, which we believe will lead to further progress being made in the current financial year," he added.
Shares in Record were down 5.1% at 24.32 pence early Friday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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