Jun 14, 2018

Unilever investors follow Brazilian trucks, not the blue-chip index

Unilever will not be included in the FTSE 100 index if it moves to a single headquarters in the Netherlands. Three fund managers with a mandate to hold FTSE 100 shares had already expressed concern about having to sell Unilever holdings at an unfavourable price if the company left the index. A FTSE 100 tracker fund would have to sell Unilever - but the whole point of passive trackers is that they do not make emotional judgments, they just match the index. Individual investors need not sell at all - as the whole point of Unilever maintaining a London listing is to allow UK holdings to be kept. Why did Unilever's share price fall? In Amsterdam as well as London? Surely European investors do not care about FTSE 100 rules? No. But they do care about €150m of lost sales - in just 11 days, in Brazil, where Unilever makes 6.5 per cent of revenues.

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