Bill Miller And Value Trust

1242 WordsOct 6, 20155 Pages
Bill Miller and Value Trust 1. How well has Value Trust performed as of the date of the case? Value Trust has performed extremely well up to the date of the case. If we measure it against the S&P 500 Index, Value Trust has outperformed it for the last 15 years. Over this period, Value Trust has had an average annual total return of 14.6% – a significant 3.67% higher than S&P 500’s average annual returns. In fact, an investment of $10,000 at the fund’s inception in 1982 would have been worth more than $330,000at the time of the case. Over the past ten years, the return was even higher for Value Trust (15.04%) compared to S&P 500 (5.96%) (See Exhibits 1 and 5). Furthermore, we can also use the Net Asset Value (NAV) to measure the performance of the fund. Value Trust’s NAV increased steadily from 1994 until 1999, and again after the market crash until the date of the case (Exhibit 1). However, a mutual fund 's NAV is relatively unimportant in gauging a fund 's performance, which is best judged by its total return. 2. What might explain the fund’s performance? Some commentators have attributed success of Bills Miller to his conscious strategy of remaining fully invested at all times instead of attempting to time the extent and scope of market investments. Others advocated Bill Miller’s unique skills and insightful strategy as an explanation to firm’s success. There are several elements of Bill Miller’s strategy. His strategy involved: buying high intrinsic-value stocks
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