Bill Miller and Value Trust
Value Trust has surpassed the S&P 500 by an average of 3.67% for the previous fifteen years. Value Trust also maintained Morningstar’s five star rating. Mutual fund investment performance can be measured by finding out its net asset value and Annual Total Return. Net Asset Value can be computed as the fund’s total assets minus the liabilities divided by funds shares outstanding. Annual total return can be measured by the increase or the decrease in net asset value plus the fund’s income distribution. These are used to find the measure of the percentage of annual growth rate of net asset value assuming that reinvestment, and the absolute dollar value today of an investment made at some point in the past. Good performance would require the investment to provide a measurable reward-to-volatility trade-off and to consistently outperform ...view middle of the document...
His methodology takes into account behavioral finance. He looks forward to the market’s overreaction to news and adjusts his investments accordingly. He also looks for distrust in the market. Small differences in choosing a benchmark against which to compare returns can cumulate to large apparent abnormalities in long-term returns. It will be extremely more difficult to continue this record as more money is invested into this fund because the few companies that compose funds only have so much available stock. Value Trust may eventually have to increase its number of stocks to continue.
Portfolio manager’s focus is to continually enhance the investment process which involves assisting in portfolio construction or rebalancing strategies and signing off on reported return forecasting and methods for risk and control cost performance. Technical analysis involves identifying profitable investment opportunities based on trends in stock princes, volume, and market sentiment. Mutual funds tend to underperform relative to the overall market due to unavoidable operating expenses, management fees, and loading fees. Capital-market efficiency is the degree to which the present asset price accurately reflects current information in the market place. The three versions of the Efficient Market Hypothesis include the weak form: stock prices already reflect all information that can be derives by examining market trading data, semi-strong: prices reflect past prices and all publicly available information, and the strong form: today’s stock prices reflect all information that could be available through a close analysis of the company and the economy. The funds are growing steadily in Miller’s Value Trust. Mutual Funds grew from 361 and 8,044 between 1970-2005. This allows the investor to make a proper decision regarding their future. Growth and the number and types of mutual funds reflected the increased liquidity in the market and the demand by investors for equity. It also adds a degree of complexity to the marketplace that altered the investment behavior of some equity investors.