Bill Miller's US-domiciled Legg Mason Value Trust finished 2004 outperforming the S&P 500 for the 14...
Bill Miller's US-domiciled Legg Mason Value Trust finished 2004 outperforming the S&P 500 for the 14th consecutive calendar year, despite trailing the index as late as October.
The group's Dublin-domiciled Value fund and UK-domiciled US Equity portfolio, both managed by Mary Chris Gay, mirror the Value Trust.
At the end of the third quarter, the consensus was that Miller's fund would underperform the benchmark. Rolling 12-month figures to the end of September showed that while the S&P 500 rose 13.87%, the Value fund returned 10.4% on a mid-to-mid basis with gross income reinvested in dollars.
In July, the fund lost more than 400 basis points relative to the market and in August was around 700 points behind.
The trust is a concentrated portfolio of 35 to 40 stocks, which invests for the long term in fairly large positions that appear to be mispriced.
Conceding that there was an element of luck involved in the trust's exceptional record, Gay said if the years had been measured January to January or March to March, there may not have been the same consistency.
Pointing at a failure to invest in energy in the summer of 2003 as a possible reason for the trust's underperformance earlier last year, Gay said a cross sector rally in November and December allowed the fund to end the year returning 11.96% while the index grew by 10.88%.