Rajiv Kaul and Bill Miller's Funds Hit Hardest by Selloff

  • Kaul's Fidelity biotech fund falls 6.9%; Miller hurt by Amazon
  • Gold mutual funds perform best during worldwide selloff

Rajiv Kaul and Bill Miller have suffered more than most mutual fund managers during this week’s global selloff, while gold mutual funds are finally getting relief.

Kaul’s $15.1 billion Fidelity Select Biotechnology Portfolio fund lost 6.9 percent in the first three trading days of the year, the worst performance among more than 3,000 U.S. mutual funds with at least $400 million in assets, according to data compiled by Bloomberg. Miller’s $2.1 billion Legg Mason Opportunity Trust fell 6.8 percent and ranked second-to-last.

Gold funds dominate the list of top-performing U.S. mutual funds as investors seek a safe haven. Seven of the 10 funds with the best returns this week invest in gold.

Stocks globally have tumbled, dragged lower by a rout in Chinese shares and falling oil prices. The MSCI All-Country World Index dropped 5.4 percent this year. 

For gold managers, 2016 represents a reversal of fortune. Many of their funds have lost more than 20 percent annually for the past five years as prices collapsed for both precious metals and gold-mining stocks. The Philadelphia Stock Exchange Gold and Silver Index lost about 25 percent annually for the past five years.

Miller’s Amazon Options

The same index gained 7 percent this year amid the global rout in stocks. The $419 million USAA Precious Metals and Minerals Fund, the top-performing gold fund this year, is up 3.9 percent in 2016. The $806 million Fidelity Advisor Gold Fund has gained 3.8 percent.

Dan Denbow, manager of the USAA fund, said the slide in Chinese stocks, political tensions in the Middle East and this week’s test of a nuclear bomb by North Korea have sparked renewed interest in the metal.

“People have forgotten gold for the past four years, but they are now saying maybe there is a reason to own it,” said Denbow in an interview.

Miller, best-known for beating the Standard & Poor’s 500 Index 15 years in a row from 1991 through 2005, has been riding a winning streak. Over the past three years his fund beat 98 percent of peers, helped by bets on a recovery in housing, soaring airline stocks and options on technology stocks, including Apple Inc. and Amazon.com Inc.

This year all of those investments have lost ground. The Amazon options traded Thursday at $327 per share, down from $385.80 on Dec. 31. Miller’s largest holding, Delta Air Lines Inc., lost 7.3 percent.

Kaul’s biotechnology fund returned 31 percent a year over the past three years, roughly keeping pace with the Nasdaq Biotechnology Index. The index is off 8.7 percent this year as of 1:35 p.m. Kaul’s top holding, Alexion Pharmaceuticals Inc., fell 7.4 percent.

Spokesmen for Legg Mason and Fidelity didn’t respond to requests for comment.

(An earlier version of this story corrected the spelling of Dan Denbow’s name.)

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