The Unilever Superannuation Fund (USF) is suing MYLIM, formerly Mercury Asset Management for negligently managing its £1 billion mandate five years ago (see Merrill, Unilever Fight it out in Court at: http://www.plansponsor.com/eprise/main/PlanSponsor/News/Rules/unilevertrial ).
The suit further charges that Galley failed to adequately supervise Alistair Lennard, the manager responsible or the equities portion of the portfolio, which lagged its benchmark (see Judge Says Unilever Targets “Nebulous” ) for five consecutive quarters.
USF lawyers, who branded Lennard as a “wild card” fund manager earlier in the trial (see Unilever CIO Failed to Keep and Eye on “Wild Card” Fund Manager ), noted that the portfolio’s active risk levels tripled, while the number of holdings fell from 60 to 40, after Lennard assumed control of the fund in the final months of 1993.
Galley, however insisted that Lennard’s style was a classic example of Mercury’s house style, which viewed flair, judgment and risk appetite as characteristics of a good fund managers.
According to Galley, this style had propelled Mercury to the top of the league of fund managers. “However sad and sorry I am to be standing here talking about a period of disappointing performance, I can look back with huge pride on what my colleagues achieved,” she told the court.
Galley maintained that despite her senior management role, she remained fully aware of the changes to the portfolio after 1993.
She noted that the change to the risk profile of the portfolio was the result of a “conscious decision” taken by bother herself and Lennard, explaining that following a period of underperformance, it was felt that the fund managers should take more risk to increase returns.
Galley could not say that she had told Unilever its fund would take more risk.
– Camilla Klein firstname.lastname@example.org
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