The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Opinion

Inside Investment: Bill Miller’s conundrum

Star money manager Bill Miller has framed the questions that the mainstream asset management industry must answer. Hedge funds will be rubbing their hands with glee.

andrewcapon.gif

It was almost a Damascene moment. In a wide-ranging and thought-provoking interview with The New York Times last month, Bill Miller, chairman of Legg Mason Capital Management, made the following comment. "The question we are asking ourselves is: should we think more broadly about probability, about the high-impact events and protecting against them by having broader exposure to the market?" The article does not give this comment any special prominence. But for the fund management industry it is a prognostication with profound implications.

For those unfamiliar with Miller or the current situation at Legg Mason, a little context is necessary. Miller built his formidable reputation as a fund manager by beating the S&P500 for 15 consecutive years between 1990 and 2005. It is a track record that is second to none. Moreover, it was built with pure stock-picking acumen. His typical portfolio held fewer than 40 names. Miller was blowing a big fat raspberry at the efficient market hypothesis year after year. He was the champion of active fund managers everywhere and rightly so – he justified their existence.

More recently, however, things have turned sour. Miller has not beaten the index in the past two years and the first quarter of 2008 was his worst ever.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree