UK - As John Richards came to the end of his cross-examination on Wednesday he told the High Court that he thought the level of risk in the Unilever portfolio managed by Alistair Lennard was high but within acceptable limits.
Richards, manager of the Select team and Alistair Lennard’s superior, under questioning from Unilever barrister Jonathan Sumption QC, said: “I think I was well aware that Alistair Lennard's portfolios were at the top end of our range. I was also aware that they had risen by the end of September, as at September; and I was also aware that some of my colleagues had raised the question as to whether the risk levels were, in fact, inappropriately high.”
But he later added: “I had certain preconceptions in my mind about the relationship between UK equity risk and total fund risk; and on the assumption that I knew what the broad asset allocation of a fund would be, I could make that trade off in my mind, although as I have said before these relationships were never linear. So I think I had satisfied myself that Mr Lennard's portfolios were constructed within an acceptable limit.”
Sumption was trying to prove that Mercury Asset Management did not put in place appropriate measures to control risk.
But, Richards was arguing that he was able to have an idea of the total risk in the fund by looking at the measure of risk provided by historical model BARRA and also via his own knowledge.
Unilever alleges Mercury Asset Management (MAM), which MLIM bought for £3.1bn in 1997, acted negligently by failing to operate adequate risk controls in the running of £1bn of its assets in 1997 and 1998. It is claiming £130m. MAM’s return in the 15 month period under review was absolute growth of 20.65%, worth £200m. In the same period the FTSE All Share gained 31%.
By Paul Sanderson
PP has analysed the accounts of the biggest pension consulting firms and recorded the turnover (revenue) in their most recent accounts. The full leaderboard is below…
UK defined benefit (DB) schemes have increasingly undertaken benefit reviews over the last four years resulting in an acceleration of scheme closures, Aon research finds.
Contributions are no longer sufficient to meet regular payments for three-quarters of small- to medium- sized defined benefit (DB) schemes, Buck analysis finds.