It came down to the wire, but Bill Miller has done it again.
Legg Mason Value Trust fund manager pushed his winning streak over the
to 14 years as of today's close, an unparalleled run.
Miller's streak was in jeopardy for most of the year and his success was not assured until only recently. The veteran fund manager trailed the S&P by more than 4 percentage points entering the fourth quarter and was 1.7 points behind the index at the end of November.
In the end, Miller's fund ended 2004 up roughly 12.3%, compared with an 11% run in the S&P 500, when dividend payments are included.
Miller himself seemed ready to throw in the towel as recently as last month. Nevertheless, strong performances by some of his top holdings late in the year spurred the 34-stock, concentrated fund higher.
Shares of wireless communications provider
, Miller's largest holding at 7.1% of the $16 billion Value Trust, shot up 25% since Sept. 30 compared with a 14% rise for the S&P. The company announced a $35 billion merger with
on Dec. 15.
provided Miller with a well-timed gift as well. Shares of Amazon.com, Miller's fourth-largest holding at 6.1% of the portfolio, spiked over 10% in late December after the company reported impressive holiday sales. And the fund's second-biggest holding at 7%, conglomerate
, also pitched in late in the year, rising over 15% since the beginning of October.
Another factor making Miller's feat more impressive is that he must overcome his fund's relatively high 1.7% expense ratio to beat the index. The average fee for a large blend fund is 1.26%, according to Morningstar.
"You can't help but cheer Miller on and hope that his streak says alive," says Morningstar analyst Kunal Kapoor. "After all, he embodies what a good active manager should be: an independent thinker who invests with the long haul in mind."
To put Miller's accomplishment in context, according to Morningstar, only two other large-cap blend funds, the
Quaker Strategic Growth fund and the
Purisima Total Return fund, have topped the S&P annually since 1998. That list expands to 15 funds if you go back a year later to 1999.
In the large-cap growth arena, Morningstar says,
American Funds AMCAP fund has beaten the index annually since 1998. And in the large-cap value category, American Funds'
Fundamental Investors fund has done so since 1999. AMCAP's streak, however, is likely to end this year.
Morningstar analyst Chris Traulsen points out that there have been 12-month rolling periods during Miller's streak when he underperformed the benchmark.