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Bill Miller Value Trust

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1. This case goes back to the year the 2005. Value Trust was an $11.2 billion mutual fund in the middle of that year and had outperformed for the Standard & Poor’s 500 Index for 14 consecutive years. The fund was managed by William H. Miller III. During those 14 years, the fund experienced an average annual return of 14.6%. This return outperformed the S & P 500 by 3.67% per year. Morningstar claimed the Value Trust mutual fund fell behind the S & P 500 in 32 12-month periods out of 152 12-month periods during the 14 year time span of consistently outperforming its benchmark index. Investment performance can be measured in many different ways. Tracking the investment’s return is a simple way of measuring investment …show more content…

These calculations bring up the relationship between risk and return. A more conservative mutual fund manager might not take on much risk, and therefore, would yield a lower return. 4. Absolute performance is the return an asset achieves over a certain period of time. Absolute return differs from relative return because it is concerned with the return of a particular asset and does not compare it to any other measure or benchmark. The absolute return for the Value Trust Fund stated annually, was 14.6% on average over the fourteen year period (1990-mid2005). Relative to the S & P 500, the Value Trust Fund surpassed its benchmark index by 3.67% annually. Value Trust earned a cumulative return of 830% from the early 1990’s to mid-2005. Value Trust Fund was a large capitalization growth stock during 2005. In order to understand this fund’s relative performance, it is useful to compare returns to the S & P 500 Composite Index and funds of similar characteristics with Bill Miller’s Value Trust. The 10-year annualized return on Large Cap funds in the market during 2005 was 6.94%. The 10-year annualized return on Foreign Large Cap funds was 5.36%. Value Trust outperformed both of these benchmarks with an annualized 10-year return of 15.04%. 6. Technical analysis involves the identification of profitable investment opportunities based on trends in stock prices, volume, market sentiment, Fibonacci numbers, etc. Fundamental analysis relies

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