UK - Merrill Lynch Investment Managers (MLIM) has taken a blow from the £750m Alliance & Leicester Pension Scheme after losing a £150m UK and global equities mandate on performance grounds.
A source close to the pension fund - which has around a 11,000 members - confirmed that the Leicester-based scheme appointed Capital International to replace MLIM, following MLIM’s underperformance over a three year period.
But the source was quick to stress that MLIM’s departure had no connection with the current MLIM versus Unilever court case.
He said: “There is no indication that this is similar to the [MLIM versus Unilever] case, or that the same staff are involved.”
Alongside Capital International, Legal & General Investment Management handle a £450m index-linked mandate and Phillips & Drew, who oversee a £150m global balanced mandate for the fund, which is advised by Watson Wyatt.
But other UK schemes are waiting on the outcome of the landmark case, in which MLIM is being sued by Unilever for £130m alleged negligence. If Unilever’s action is successful the move could spark a string of similar claims against investment managers, according to some industry experts.
As reported on IPN in October the J. Sainsbury Pension Fund is also considering action against MLIM, which it used as a UK equity manager up until January 1999. Sainsbury pension fund manager Geof Pearson said then: “It is well known that Sainsbury’s and a number of other pension schemes suffered in a similar way to Unilever in 1997 and 1998.
Therefore, if Unilever win their case, there is likely to be similar claims that MLIM is likely to face. Sainsbury’s is known to be considering action.”
Surrey County Council Pension Fund is also thought to be another fund interested in the case.
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