The Bill Miller Era: A Look Back at a 30-Year Record
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As of April 15, 2012, Bill Miller has been part of the Legg Mason Capital Management Value Trust (LMVTX) management team for 30 years, a time span that includes his legendary run of beating the S&P 500 for 15 straight years. His stint makes him one of the industry's longest-serving portfolio managers on a single fund. The average portfolio manager has five years of tenure. Miller and the late Ernie Kiehne launched Value Trust on April 16, 1982, and managed it together for more than eight years. Miller ran the fund solo between November 1990 and November 2010, when his named successor, Sam Peters, joined as a comanager. Miller steps off the fund this month, clearing the way for Peters to take sole control of it on May 1, 2012. Mary Chris Gay, who has served the fund as its assistant portfolio manager since early 2006, will continue in that role.
Just as notable as Miller's extended tenure on Value Trust is his performance record there. Through the 1980s he and Kiehne struggled at times and ended the decade without fanfare: Between the fund's inception and November 1990, when Kiehne retired from the fund, the fund gained an annualized 16% versus 17.1% for the index. However, Miller really made a name for himself in the 1990s, particularly in the latter half when he showed his willingness to step outside traditional value areas and into the technology, media, and telecom stocks that fueled the raging bull market. The addition of growth stocks allowed the fund to keep pace while the rest of the value world stumbled. When the tech bubble popped in early 2000, Value Trust suffered, but Miller kept the fund ahead of the S&P 500 Index as the bear market endured through 2002. Overall between November 1990 and early October 2002, the fund gained 14.5% on average annually, a full 4 percentage points more than the S&P 500 Index. During this period, Miller was also well on his way to establishing his celebrated 15-year streak (1991-2005).
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