Miller Attracts Investors Again as Legg Mason Fund SoarsCharles Stein
Investors have warmed up to Bill Miller again.
Miller’s $1.7 billion Legg Mason Opportunity Trust won $168 million in deposits in October, the most the fund has attracted in more than six years, according to data from Chicago-based Morningstar Inc. In the five years through 2012, shareholders pulled $3.4 billion from the fund.
Miller, 63, is best known for beating the Standard & Poor’s 500 Index in his Legg Mason Capital Management Value Trust for a record 15 years through 2005, luring assets to Baltimore-based Legg Mason Inc. He stepped down from that fund in April 2012 after returns slumped. Miller, whose Opportunity Trust lost 65 percent in 2008 and 35 percent in 2011 as his bets on financial stocks went awry, is enjoying his second straight year of top performance at the fund.
“Investors too often invest looking backward, not forward,” Miller wrote in an e-mail today, adding that since the global financial crisis in 2008, the fund has outperformed the market in four of the past five years. “We are pleased by our current steady inflows.”
Opportunity Trust returned 58 percent this year through yesterday after gaining 40 percent in 2012, better than 98 percent of peers in both years, according to data compiled by Bloomberg. It’s also beaten 90 percent of the competition in the past three years and 98 percent in the past five years.
Stock mutual funds in the U.S. have attracted more money in 2013 than they have in 13 years, as equities trade near record highs and most bonds have lost ground as interest rates rise. Equity funds gathered $172 billion in the year’s first 10 months, the most since 2000, Morningstar data show.
Miller’s comeback has been fueled, in part, by successful bets on a rebound in housing. His fund’s top two holdings, Richmond, Virginia-based Genworth Financial Inc. and MGIC Investment Corp. of Milwaukee, both insure mortgages, a business that has benefited from the increase in home prices since 2009.
Genworth shares have more than doubled this year and MGIC has tripled.
“Housing fundamentals are likely to be positive for years,” Miller said in an October 2012 interview.
Miller’s top holdings also include Los Gatos, California-based Netflix Inc., which has more than tripled this year as original shows fuel subscriber growth in its streaming service.
Legg Mason has struggled with more than five years of net redemptions. Clients pulled $4 billion from the firm’s stock funds in the third quarter, the company reported last month.