BILL MILLER AND VALUE TRUST

Assignment

Shahzaib Mahar (091-17-0017)

MBA-III

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 BILL MILLER AND VALUE TRUST
1. How well has trust performed in recent years? In making that assessment, what benchmark(s)
are you using? How do you measure investment performance? What does good performance
mean to you?
Ans: Value trust performed well in recent years. Value Trust had earned a commulative return
of more than 830% and outperformed S&P 500 – benchmark index over 14 years in a row. Trust
managed by the Bill Miller. Its big achievement for any manager in this industry. Miller
performed well in both situations, in bull market in which share prices are rising and encouraging
buying and in bear market in which share prices are falling, encouraging selling.
Funds assessment based on S&P 500 Index and Russel 2000 (Benchmark indices). Investment
performance measured through comparing investment returns with benchmarks indices. For me,
a good performance that beat the benchmark indices in any economic situation.
2. What might explain the fund's performance? To what extent do you believe an investment
strategy, such as Miller's, explains performance?
Ans: A fund that continuously increase its net asset value (NAV). How much NAV growing over
the year and how much its total return on investment. Performance also should be compared with
its benchmark indices.
Miller was research-intensive and highly concentrated. Buy low-price, high intrinsic value
stocks, he knows through deeply analysis that stocks are undervalued, and their intrinsic value is
higher. Miller more see stocks as future perspective, he compares the business worth with stocks
worth, if stock worth is less, rete of return is 100%.
I believe Miller’s strategy is good, because he deeply analyses the industry and companies. And
see the actual worth of the company and see in future and long-term perspective. Miller was not
risk averse, he takes risk and earn high returns.

3. How easy will it be to sustain Miller's historical performance record into the future? What
factors support your conclusion?
Ans: To sustain Miller’s historical performance its necessary for trust to continue Miller’s
strategy. Before investment there must be some research about particular stocks and know the
companies’ worth and compare with respective stocks. Diversify funds portfolio, if one is not
performing well shift to another.

4. Consider the mutual fund Industry. What role do portfolio managers play? What are
differences between fundamental and technical security analysis? How well do mutual funds
generally perform relative to the overall market?

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 Ans: Mutual fund is an investment made up of a pool of moneys collected from many investors
for the purpose of investing in securities such as stocks, bonds, money market instruments and
other assets. The role of portfolio mangers is to invest in mutual funds and manage and look day
to day trading and make investment decision to benefit the investors. Analyze market, economic
trends and securities to make good investment decision. Individual don’t know much about, so
managers have professional expertise to reran high returns. Its difficult for individual investor to
own many different stocks so portfolio managers do that for investors.
Difference between fundamental and technical analysis is that in fundamental analysis mangers
analyze the economic fundamentals of a company and its industry. See industry conditions to the
financial condition and supply and demand, cost and growth perspective. Bu in technical analysis
see the opportunities based on stock price trends, volume, market sentiment. Use stock charts to
identify trends and patterns. In fundamental identify the security’s intrinsic value but in technical
analysis it’s not like that.
Mutual fund industry performed well. Between 1970 and 2005, mutual funds grew for 361 to
8,044. Mutual funds alone owned more than 20% of the outstanding stocks of U.S companies.
There is high growth in this industry.

5. What is capital market efficiency? What are its implications for investment performance in
general? What are implications for fund managers, if the market exhibits characteristics of
strong, semi strong, or weak efficiency?
Ans: The degree to which the present asset price accurately reflects current information in
the market place. Everyone has same information in the industry, then everyone has equal chance
to earn profit.
For portfolio managers, in strong efficiency it will be difficult for fund managers to earn
abnormal returns because everyone has same information and there is no type of any information
that give investor advantage.
In semi strong efficiency, today’s prices reflected all past prices and all publicly available
information. One who have extra information that is not publicly available can get advantage.
In weak efficiency, today’s stock prices reflect all the data of past prices. Fundamental analysis
can help to know the intrinsic value of the stock.

6. Suppose that you are an advisor to wealthy individuals in the area of equity investments. In
2005, would you recommend investing in Miller's Value Trust? What beliefs about the equity
markets does your answer reflect?
Ans: I suggest them to wealthy individuals to invest in Miller’s value trust because it performed
very well over the past years. They have more experience and fund outperformed its benchmark
index by 3.67%. Its good option for them to invest their money in value trust.

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