The AUME figure of $58.6bn for end March was down 9% compared with the end of December 2019 (and by 3% in sterling terms to £47.3bn). This was a satisfactory outcome given that nearly all passive and dynamic hedging and some multi-product mandates are linked to underlying equity or other market assets. On client AUME flows, a short-term tactical mandate of $1bn terminated in the period (previously announced). There was an inflow of $1.1bn into passive mandates, which, with other flows, meant a virtually neutral overall position in terms of client flows. The client count was also effectively stable at 72 (73 end December). As would be expected, market moves were substantially negative, knocking $4.5bn off the total while currency movements deducted a further $1.7bn. Record indicates that there has been no change in its dividend policy (cover of at least 1x) and that it expects to maintain payment of its ordinary dividend (full year 2.30p, implying a yield of 3.5% for the final payment alone)

Heightened volatility, reduced liquidity in foreign exchange markets and a move to remote working have presented challenges for currency managers but Record has continued to execute its mandates on behalf of clients without disruption, demonstrating the resilience of its operations. Client engagement during recent weeks has been strong and the market background seems likely to encourage clients and potential clients to maintain or add to risk-management mandates. 

Our EPS estimates for FY20 and FY21 are reduced by 3% and 24% respectively, primarily because of lower AUME following market moves. Nevertheless, the shares trade on a calendar year 2020 P/E below the peer average (or broadly in line for FY21). As before, our FY21 estimate does not assume any performance fees.