Bill Miller Value Trust Case Group Report 2
Case Report
Bill Miller and Value Trust
February 9th, 2015
Bill Miller and Value Trust is a well-known mutual fund company that has outperformed the S&P 500 from 1991 until 2005 and this is the longest streak of mutual fund success in history. The mutual fund was the managed by William H. “Bill” Miller III who by concept was a contrarian, which means that his investments were focused on low price, high value funds. The “measure “of the industry are based on indexes and every fund is compared to the S&P 500: which is considered the most accurate depiction of the market. Several key elements of Bill Miller’s contrarian strategy emerged. This strategy involved: buying low-price high intrinsic-value stocks, taking heart in pessimistic markets, remembering that the lowest average cost wins, becoming wary of valuation illusions, taking the long view, looking for cyclical and secular underpricing, buying low-expectation stocks and taking risks. All of these elements contribute to his investment portfolio and philosophy on how to create money in bull and bear markets. Usually during a bear market there is a sense of pessimism and investors begin to sell off investments, but this is when Miller was more aggressive when investing. Bear markets tend to develop when the economy enters a recession and typically investors lose faith in the market as a whole. Bear markets may occur from time to time decreasing the demand for stocks.
Basically, a fund’s performance is difficult to measure. Good and bad performance varies based on the individual’s goals and objectives. There isn’t an official “benchmark” to determine the success of a fund. As discussed in class, trying to beat the market is virtually impossible - someone else will always be one-step ahead. Likewise, Miller’s investment strategy explains his good performance only to an extent. Most of his success in beating the market was simply luck and market timing. First, he uses a low turnover rate strategy. This is
Bill Miller and Value Trust
February 9th, 2015
Bill Miller and Value Trust is a well-known mutual fund company that has outperformed the S&P 500 from 1991 until 2005 and this is the longest streak of mutual fund success in history. The mutual fund was the managed by William H. “Bill” Miller III who by concept was a contrarian, which means that his investments were focused on low price, high value funds. The “measure “of the industry are based on indexes and every fund is compared to the S&P 500: which is considered the most accurate depiction of the market. Several key elements of Bill Miller’s contrarian strategy emerged. This strategy involved: buying low-price high intrinsic-value stocks, taking heart in pessimistic markets, remembering that the lowest average cost wins, becoming wary of valuation illusions, taking the long view, looking for cyclical and secular underpricing, buying low-expectation stocks and taking risks. All of these elements contribute to his investment portfolio and philosophy on how to create money in bull and bear markets. Usually during a bear market there is a sense of pessimism and investors begin to sell off investments, but this is when Miller was more aggressive when investing. Bear markets tend to develop when the economy enters a recession and typically investors lose faith in the market as a whole. Bear markets may occur from time to time decreasing the demand for stocks.
Basically, a fund’s performance is difficult to measure. Good and bad performance varies based on the individual’s goals and objectives. There isn’t an official “benchmark” to determine the success of a fund. As discussed in class, trying to beat the market is virtually impossible - someone else will always be one-step ahead. Likewise, Miller’s investment strategy explains his good performance only to an extent. Most of his success in beating the market was simply luck and market timing. First, he uses a low turnover rate strategy. This is