UPDATE 2-Record Currency Mgmt targets U.S. after tough 2008

* Asset manager looks to build U.S. client base

* Group sees recovery in investment performance

* Pretax profit slides 34 pct, performance fees fall 94 pct (Updates with CEO, analyst comment, outlook)

By James Molony

LONDON, June 16 (Reuters) - British fund manager Record Currency Management (RECL.L) wants to tap demand for passive and hedging products among U.S. investors after tumbling performance fees sparked a 34 percent decline in profit in 2008.

Pretax profit declined to 26.8 million pounds ($43.70 million) in the year to end-March as performance fees crashed 94 percent to 1.4 million pounds. The firm suffered after markets were caught out by the unwinding of carry trades sparked by the credit crisis. "We are working very actively in the U.S., where we think there are significant opportunities to build our hedging, as well as our absolute return, client-base," Neil Record, chief executive officer, said. He expects the majority of new business to come from the U.S. in 2009.

The group saw assets under management equivalent (AuME) decline 43 percent to $31.5 billion at end-March as client numbers fell by 20 to 121, but the signs are that 2009 will be better, the chief executive said.

The group has signed one active hedging mandate already this year and another is expected shortly which combined will total $6 billion, he said.

"Risk reduction has naturally risen up the agenda of investors. This has meant that we are seeing an increasing demand," he said.

POTENTIAL

The group sees strong potential for a recovery in its core investment process, the forward rate bias, which relies on higher yielding currencies outperforming lower yielding currencies over the long-term.

"The core contributors to this return will be as prevalent over the foreseeable future as they have been over most of the past thirty years," Record said.

Broker Noble said results were in line with expectations and the company was set to benefit from greater interest in forward rate bias as an alternative asset class.

Shares in Record were unmoved at 62.9 pence at 0812 BST having fallen 15.57 percent in the year to date.

Peter Wakefield, Record's chief operating officer, will leave the board on August 28 to pursue interests outside financial services. His responsibilities will be divided between the chief financial and chief investment officers. ($1=.6133 Pound) (Editing by Rupert Winchester) (To read the Reuters Hedge Fund Blog click on blogs.reuters.com/hedgehub; for the Global Investing Blog click here)