In its second-quarter update, Record PLC (LON:RECL) reported a broadly stable figure for assets under management equivalent (AUME), but also included news of a noticeable passive hedging outflow due in Q319. While this prompts 3% and 9% reductions in our FY19 and FY20 EPS estimates, the group is seeing good opportunities to win new business and our estimates exclude both potential AUME inflows and performance fees.
Q219 update
There was a modest net outflow of client AUME during the quarter ($0.6bn), which exactly matched the aggregate inflow in the first quarter. Other moves (related to market levels and scaling of mandates based on volatility) were a net positive of $0.5bn, leaving end-September AUME at $61.8bn, 0.2% below the June figure or, in sterling terms, up 1.1% to £47.4bn. Client terminations in passive hedging are set to result in estimated outflows of $2.5bn in Q319. These arise from clients switching to a different fund structure or hedging approach, although Record notes that there is continued competitive pressure, particularly in passive hedging.
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