All Good Things Have to Come to an End, Even Bill Miller Can’t Escape

Legg Mason’s Bill Miller, the manager of Legg Mason Value Trust (LMVTX), has beaten S&P 500 for 15 consecutive years since 1991. His winning streak, however, is about to come to an end as LMVTX returns only 6.71% as of yesterday compared to the 16.5% gain of S&P 500. According to a Bloomberg.com article, the Legg Mason fund, currently has $20B of assets, had “an average annual rate of 15.8 percent, compared with 11.9 percent for the U.S. stock benchmark” for the past fifteen years.

The fund’s top 10 holdings are

  • AES Corporation
  • Tyco International, Ltd.
  • Qwest Communications International, Inc.
  • Sprint Nextel Corporation
  • UnitedHealth Group, Inc.
  • J.P. Morgan Chase & Co.
  • Google, Inc.
  • Sears Holdings Corporation
  • Amazon.com, Inc.
  • Aetna, Inc.

Among them, Sprint Nextel , UnitedHealth, Amazon.com, and Aetna all declined this year, contributing to the lackluster performance of the fund. However, its underperformance in 2006 compared S&P 500 “won’t blemish an otherwise stellar long-term record,” said Mr. John Bogle, founder of the Vanguard Group, in a recent MarketWatch article. Mr. Bogle, the advocate of low-cost index funds, said

I admire his long-term focus and willingness to go against the crowd. Bill’s the real deal who brings a lot to the table.

Well, all god things have to come to an end!

LMVTX has an ER of 1.68% and requires a minimum of $1000 to open an account.

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