A concentrated fund can make an average investor look impressive if luck goes their way for awhile... it can also make an excellent investor look foolish over the short run... but over time the market is a weighing machine and I think the recent events have highlighted how rare true investing prowess is... Bill Miller established his reputation via marketing and his tenuous lead over an arbitrary market average that most value investors would be ashamed to take pride in beating... if you looked at his portfolio years ago it did not bear any of the hallmarks of a great investor... it had (and continues to hold) widely known and widely held names which Miller felt were "undervalued" (in actuality most or many of these were growth stocks which he felt would continue to go higher) and he has rarely exhibited contrarian thinking in his holdings... even at the height of the funds performance, its lead over its chosen index was minimal and certainly evaporated after taxes... and when you look at it over a ten year period its abysmal... and against any decent value fund its embarrassing, even prior to his utter missing of energy and financials...
I cant imagine what goes through the mind of holders of this fund; they must read the continuing glowing press (even from Morningstar) and figure its worth hanging around for the market to bestow massive returns on Ebay and Yahoo which will warrant the last ten years of less than zero returns... I'd love some input from long term holders or recent purchasers of this fund...
The ten year chart for LMVTX vs VFINX shows the VG500 index at 0% return for ten years... LMVTX at close to a 50% loss over the same period... and for the sake of argument, a similar concentrated value fund known as FAIRX is at 200% over the same period... and those charts do not have a massive amount of fluctuation in them over those long periods... they are long, slow, steady measures of processes...
Does LMVTX say more about concentrated, high volatility funds or about the talents of its manager? Hmmmm...
Ajw
