Wendy Mayall, the chief investment officer of the £4bn Unilever pension fund, denied yesterday that she had known of Mercury Asset Management's unconventional house style, a factor in its failure to meet performance targets in managing £1bn of Unilever's assets.
Mrs Mayall, a witness for Unilever in its legal dispute with Mercury, told the High Court that the investment house did not make clear to her or her colleagues its approach to managing Unilever's assets, which included investing in only one of the 10 largest stocks in the UK and having no exposure to banks, insurance or pharmaceutical companies.
Mrs Mayall said: "Mercury was very large and I don't think it is fair to say that it had one rigid style. It had an approach which could be applied in a number of ways.''
Mercury has arguedthat Unilever's trustees were made well aware that it believed in constructing concentrated portfolios containing a relatively small number of blue-chip stocks. Mercury, now owned by Merrill Lynch, said that because it made its investment style clear it should not have to pay compensation of £130m for failing to meet performance targets in 1997 and 1998. These targets were that it should not undershoot an agreed index by more than 3 per cent and should not take risks to outperform it by more than 1 per cent.
Mrs Mayall, aged 43, was appointed as a consultant to Unilever's pension fund in 1995 because of her skills in investment advice and fund management, although she said she did not have a full understanding of concepts such as concentrated risk, key to Mercury's approach of not diversifying.
Mrs Mayallsaid she was unable to analyse the asset allocation of Unilever's entire pension fund when she became its chief investment officer in 1996, and relied for expert advice on the consultancy Frank Russell when she took them on board. Hugh Stirk, a former chairman of the Unilever board of trustees, testified that the group looked to Mrs Mayall for detailed analysis of how Mercury and other investment managers were allocating assets.Reuse content