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Legg Mason Value Fund

Bill Miller, the fund manager of Legg Mason's Value Fund, had delivered outstanding track record in beating the S&P 500 Index in 15 consecutive calendar year from 1991-2005. He is probably the only fund manager that had delivered the spectacular performance.

The fund did not perform well from 2006 till now due to its underweight position in energy sector, which have been the star performance in the market. As of 31 March 2008, the fund overweight following key sectors: information technology (+9.86%), Consumer Discretionary (+13.61%), Financials (+5.44%) and underweight the following key sectors: industrial (-8.11%), energy (-13.25%) and consumer staples (-11.07%) against the S&P index.

There is a second Legg Mason building across t...

There is a second Legg Mason building across the harbor which creates quite the light show in the water. (Photo credit: Wikipedia)

Although the fund had not been performing since 2006, it is worth taking a second look. This is because the fund has substantial position in the financial sector. This implied that if the financial crisis ends, the fund could be the big beneficiary from the turnaround in the sector. This fund is a good proxy to the US market.

It is unfortunate to learn that the fund has substantial holding in Freddie Mac. As indicated earlier, the fund is quite focus with its investment style. Warren Buffet says, "Wide diversification is only required when investors do not understand what they are doing." The reality is sometimes we really don't know but we are not aware that we don't know.

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