'Lack of care' on Unilever fund

THE poor performance of Unilever's pension fund was due to insufficient diversification and 'a lack of care' by Mercury Asset Management, a leading actuary told the High Court today.

Gordon Bagot, who spent 20 years as an investment consultant with The WM Company, said the results of Unilever's UK equity fund managed by Mercury in 1997 and 1998 were extremely poor and the portfolio was too aggressive for the performance targets set by Unilever.

Bagot was called as an expert witness by Unilever, which is suing Mercury, now part of Merrill Lynch, for £130m over the fund's poor performance.

Management reporting and control structures failed, he wrote of Mercury in a witness statement, saying MAM's relative performance over these periods was the worst he had ever seen. The structure of the fund, which was weighted heavily towards UK industrial stocks and contained no bank shares, was very different to what he would have expected given that Mercury was required to outperform the benchmark by only 1% while not underperforming it by more than 3%.

He said Mercury fund manager Alistair Lennard had taken significant bets with large sums of money.