Andrew Leckey q&e

August 24, 2008|By Andrew Leckey | Andrew Leckey,Tribune Media Services

Q: I thought Bill Miller was supposed to be a genius. What happened to Legg Mason Value Trust fund?

- M.B., via the Internet

A: Fifteen consecutive years of outperforming the Standard & Poor's 500 ended abruptly after 2005, and the well-known Baltimore-based fund hit the wall.

It held a concentrated portfolio that included a big stake in financial stocks such as Freddie Mac, Citigroup Inc. and Merrill Lynch & Co. It owned home builders, some disappointing technology plays and no energy stocks.

Investors noticed. Withdrawals and declining value have knocked its total assets this year from $17 billion to less than $10 billion.

LMVTX is down 40 percent during the past 12 months and down 9 percent in annualized return over the past three years.

"Fundamentally the fund's approach is sound and, despite some mistakes, we're still impressed by its analysis," said Greg Carlson, analyst with Morningstar Inc. in Chicago, who considers it a core holding for patient investors.

Andrew Leckey is a Tribune Media Services columnist. E-mail him at yourmoney@tribune.com.

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