Archive News (2016)


11/12/2016 FT: manipulation in FX Markets a thing of the past?

Manipulation of foreign exchange (FX) indices, front-running of currency trades and mismanagement of benchmarks are all part of the FX industry's turbulent history. Since its inception, the $5 trillion daily FX market has experienced more than $10 billion in fines globally. James Wood-Collins, CEO at Record, reminds us that standards in FX must be prevented from slipping if it is to remain as a trusted market.

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08/12/2016 Institutional Investor: Pension funds redefine their currency hedging

In a market where many pension and sovereign wealth funds hold large investments in overseas assets, currency hedging can help to reduce portfolio volatility and unrewarded currency risk. Javier Corominas, Head of Economic Research and FX Strategy at Record, identifies currency as a very important risk element for final salary pension funds in today’s market.

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29/11/2016 Reuters World Service: Record Indicators point to a long Dollar

In the wake of Donald Trump's election as US President and lowering oil prices, dollar indicies point towards a dollar appreciation against other major currency pairs. Javier Corominas, Head of Economic Research and FX Strategy at Record, identifies the upcoming Italian Referendum and ECB Monetary Policy meeting as being critical events that are likely to increase dollar volatility.

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While geopolitical factors and global policy play important roles in investment returns, fundamental basics, such as central bank policies, corporate earnings and inflation measures, are critical to any investor.  James Wood-Collins, CEO at Record, reminds us of how FX market volatility should be in the mind of all investors, regardless of asset class.

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24/11/2016 IPE: The effects of political tensions in Europe

Looking forward to 2017, investors can expect to see a shift in the geopolitical landscape. Elections in Germany, Brexit in the UK and far-right nationalists in France will all play a part in contributing to market volatility. The article focuses on the, potential, political instability and international relations of Europe’s biggest economic players. James Wood-Collins, CEO at Record, commented that the current discussion in the UK will be as to whether there will be a ‘hard’ or ‘soft’ exit from Europe.

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01/11/2016 IPE: Difference between yen and yuan

One of the big currency stories so far this year is the behaviour of both the yen and yuan.  The Bank of Japan is struggling with the yen appreciation, trying innovative policy changes to prompt economic growth, while the Peoples Bank of China are facing yuan depreciation as they try to implement more developed market banking policies. Javier Corominas, Head of Economic Research and FX Strategy at Record, commented that yuan depreciation is likely to continue in the current market and that the yield differential is likely one of the only ways to capture their growth.

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01/11/2016 IPE: Emerging market currencies rebounding

Following a period of emerging market currency weakness over the past few years, they finally seem to be rebounding due to the ongoing search for higher yields. The question follows as to whether this trend is likely to continue with people falling on both sides of the argument. Javier Corominas, Head of Economic Research and FX Strategy at Record, commented that the strengthening could continue, as undervaluation against the US dollar can still typically be 15-20%.

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02/10/2016 Euromoney: extension of CLS

CLS, Continuous Linked Settlement, currently offers member firms the opportunity only to pay the net sum as opposed to the gross amounts for both legs of the FX trade. In a new product offering, CLS aims to offer a similar service, CLS Netting, encompassing currencies not currently covered, and to non-members of the existing service. James Wood-Collins, CEO of Record Currency Management, commented that the new offering could be very attractive to participants who would otherwise have to settle gross FX trades.

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01/10/2016 Asian Investor: Risk-seeking currency strategies

James Wood-Collins, CEO of Record Currency Management, recently sat down with Joe Marsh from Asian Investor to discuss profit-seeking strategies within the currency market. Record’s currency strategies, their allocations and weightings were discussed within the context of recent macro and monetary factors; the effects of Brexit; the increased interest in emerging market currencies; and the effect of increased investor trading in the Chinese renminbi.

28/09/2016 European Pensions: German diversification

With 10-year Bund yields below 0%, the German pension industry is having a tough time, and continued loose monetary policy from the ECB does little to ease its woes. One of the ways in which funds are cautiously taking more risk is in the alternatives space. Dmitri Tikhonov, Head of Portfolio Management at Record, commented that pooled investment structures can be preferred as the manager has to meet certain due diligence constraints, lessening the onus on the investor.

28/09/2016 European Pensions: finding the factors

While identifying concepts, or factors, and using them to guide an investment approach has been used for decades, managers are seeing increasing demand for their use across both passive and active styles, from equities to multi-asset programmes. Jan Witte, Director of Quantitative Research at Record, expects that using factors will become more routine over the next decade once they have proven their credentials.


07/09/2016 Profit and Loss: calm before the storm?

In the wake of the EU referendum, currency markets appear to have calmed down with implied volatilities lower than in early 2015. However, the horizon is littered with numerous events that may disturb the peace, including the US presidential race. Javier Corominas, Head of Economic Research and FX Strategy at Record, commented that policy decisions, as well as global political events, would also continue to influence the way the markets move.

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01/09/2016 IPE: emerging market expectations

Despite pessimism in 2015, 2016 has seen many managers become increasingly optimistic about the potential returns from investing in emerging markets. James Wood-Collins, CEO of Record, highlights how currency plays an important role in potential returns from emerging markets. He says many investors look purely at the spot movements without considering the interest rate gains by holding the currencies.

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30/08/2016 Bloomberg: FX strategies performing well

Since the beginning of 2016, three key currency investment strategies, carry, value and momentum, have shown positive performance. This has been unusual in the past 10 years where low interest rates and converging central bank policy have made choosing the right strategy critical. Javier Corominas, Head of Economic Research and FX Strategy at Record, commented on the positive returns in Record’s momentum strategy.


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22/08/2016 eFinancial News: Will Brexit lead to further issues in Europe?

Post Brexit there is great discussion about whether this will lead to further destabilisation of Europe, similar to the breakdown of the ERM in the early nineties. Whether this will lead to economic or political turmoil in Europe or further countries choosing to exit the EU, it is unclear what the fallout will be. Neil Record, Chairman of Record Currency Management, thinks that it could be a strong economic country which opts to leave with the Netherlands being a definite possibility. 

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11/08/2016 Reuters: Sterling again falls below $1.30 level

As a slowdown in the UK housing market has been announced, sterling has fallen below $1.30 again with further falls predicted by many forecasters. Javier Corominas, Head of Economic Research and FX Strategy at Record, commented that should interest rates be cut further by the Bank of England then this could lead to another fall in sterling, but the issue is that the Bank hasn’t decided yet.

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01/08/2016 Reuters: pound weakens on poor manufacturing data

Fallout from the Brexit vote has hit manufacturing, shown by a fall in the Purchasing Managers’ Index which reached its lowest level since February 2013, causing a dip in sterling. This reverses the pound’s recent appreciation against the US dollar in the aftermath of the vote to leave the EU. Javier Corominas, Head of Economic Research and FX Strategy at Record, commented on the increasing balance of views regarding a sustainable level for sterling.


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29/07/2016 Reuters: Dynamically hedged ETFs underperforming unhedged ETFs

Since their launch in January, the range of dynamically hedged ETF’s managed by BlackRock and WisdomTree have both underperformed some of their unhedged and fully hedged counterparts.  The argument is that as signals are only reset once a month there is no response to extreme events (like Brexit) but James Wood-Collins, CEO of Record, defends the strategy saying this reduces transaction costs and limits responses to any false signals.

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28/07/2016 Reuters: “Helicopter Money” as a potential deflation solution

“Helicopter Money”, essentially the central bank printing new money and distributing it to end users for free, may be the only solution to Japan’s lasting deflation but could damage the currency drastically. The question is also whether this is the future of all developed economics. Javier Corominas, Head of Economic Research and FX Strategy at Record, commented that this is a solution in which central bank independence is essentially defunct leading to the potential monetisation of everything.

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While investors continue to show appetite for risk and return, a lack of long-term movements in the currency markets, punctuated by severe events, has left money managers still looking for return. James Wood-Collins, CEO of Record, commented that emerging market currencies have performed well in 2016 in general while a diversified exposure can reduce the risk from unexpected crises.

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23/06/2016 market makers struggle to balance Brexit books

With a binary outcome, the EU referendum has prompted many asset owners to look to hedge their sterling and rate positions. Market makers, however, have had difficulty finding takers for the other side of the trades, with few hedge funds will to take such risks during a tough time for the industry. James Wood-Collins, CEO of Record, commented that it was key for clients to avoid rolling FX hedges when volatility is expected to increase and spreads are expected to widen.

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21/06/2016 Profit & Loss: uncertainty in sterling

With the EU referendum dominating headlines around the world, Javier Corominas, Head of Economic Research and FX Strategy at Record, participated in a webinar hosted by Profit and Loss. With widespread agreement that a Brexit vote would trigger volatility in the FX markets, Javier noted that volatility could stay high even with the UK voting to remain.

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19/05/2016 Reuters: Pound may need intervention after Brexit

FX industry insiders have suggested that the Bank of England may have to act in the currency markets to stabilise the pound sterling if there is a Brexit vote. Market participants are particularly sensitive about event risk since the turbulence markets saw when the SNB removed its cap on the value of the Swiss Franc in January 2015. However, Neil Record believes that the Bank of England should simply leave events to the market. 

19/05/2016 Asset view: Currencies in investment portfolios

In a panel discussion, James Wood-Collins, CEO of Record, and others discuss the increasingly prominent role that currencies play in institutional investors' portfolios. The large US dollar rally over the last two years has focused investors' minds on the need to manage currency risk and members of the panel discuss what we can expect from currency markets in the coming months.

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13/05/2016 Citywire: Currency’s time in the spotlight

With unstable equity markets and low yielding bonds, the alternatives markets is looking increasingly attractive for investors looking for diversified returns. Javier Corominas, Head of Economic Research and FX Strategy at Record, commented that an approach that combines the main factors in FX should benefit investors in the medium term.

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03/04/2016 FT: Are currency wars back?

Investors remain split on whether global central banks are delibrately devaluing their currencies in order to increase their economies' competitiveness. Javier Corominas, Head of Economic Research at Record, suggested that in fact policymakers were peaceful as they are aware of the risks of entering a currency war.

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03/04/2016 FT: Currency markets may hold further surprises

The decision of the SNB to remove its cap on the value of the Swiss Franc last January shocked currency markets; however, financial markets often have short memories and some believe that another Swiss franc shock could be around the corner. James Wood-Collins, CEO of Record, stated that while the risk of another Swiss shock cannot be ignored, it would likely have less impact than in January 2015. 

01/04/2016 IPE: Pension funds are split on factor investing

Some European pension funds are eagerly embracing factor investing while others remain cautious on it. Factor investing allows pension funds to access higher returns by accessing rewarded risks; however, the volatility of short-term returns means that they require prudent risk-management. Jan Witte, Quantitative Research Manager at Record, stated that he expected to see factor investing to become more widely adopted as it becomes more widely and better understood.   

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01/04/2016 Citywire: Currency wars return?

In a recent Citywire discussion about currency, Javier Corominas, Head of Economic Research and FX Strategy at Record, argued that there were no evidence of currency conflict in emerging markets. He went on to add that the case for both currency risk management and currency investment remained as strong as ever. 

24/03/2016 Professional Pensions: Hedging could suffer from incoming derivatives legislation

While current rules exempt pension funds from the posting of variation margin for centrally cleared derivatives, the introduction of bank capital requirements may hinder the banks' ability to accept non-cash for FX hedging programmes. James Wood-Collins, CEO of Record, commented that a double-standard pricing model (for cash and non-cash collateral) and the administrative burden of the new requirements may discourage the prudent activity of currency hedging.

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16/03/2016 eFinancial News: Clients require independence

With the FX markets rocking from recent scandals many asset managers and owners have commented that they are looking for assurance on their transaction costs. James Wood-Collins, CEO of Record, commented that Record was willing to invest in such a service but hadn’t yet found one that met all the requirements.

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16/03/2016 Pensions Age: The challenge ahead

Investment risk is as critical today as ever before, and it is not helped by proposed changes to the legislation and central bank intervention. In the volatile equity markets, equity risk is often priority number one but James Wood-Collins, CEO of Record, counsels that investors shouldn’t ignore currency risk.

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23/02/2016 P&I: Brexit probably weakens UK

The impact of the UK leaving the European Union, so-called Brexit, could have a very serious impact on the markets that is not yet priced in. The general consensus amongst managers, pension funds and consultants is that volatility will be higher and the effect will be negative on sterling, gilts and even UK equities. James Wood Collins, CEO of Record, commented that the firm will avoid rolling clients' hedges during turbulent markets around the time of the referendum.

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28/01/2016 Professional Pensions: Reasons to consider currency

Foreign exchange is increasingly being viewed as a tool to exploit macro-economic trends again as divergent economic growth rates have encouraged currency market activity. What is more, the currency strategies have evolved from the carry trade, which dominated the market before 2008, to more factor based investment styles seen in other asset classes. James Wood-Collins, CEO of Record Currency Management, noted that clients were now considering the different factors behind currency returns.

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14/01/2016 P&I: Pension funds in Asia take a stance on FX

After a couple of years of strong US dollar performance, Asian pension funds are considering their currency hedging options. The world’s largest pension fund in Tokyo commented that it was willing to hedge its 35% foreign exposure should the yen make a comeback against the US dollar, while Korea’s National Pension Service is considering using a dynamic currency overlay on its 24% international exposure. James Wood-Collins, CEO of Record, commented that the firm is growing an Australasian client base with a local agent and seeing increased interest from entities east Asia.

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