Legg Mason’s star money manager closed out a brutal 2008 with a new distinction.
The worst-performing mutual funds in 2008:
» Legg Mason Opportunity Trust, 65 percent decrease
» Winslow Green Growth Fund, 61 percent decrease
» Legg Mason Growth Trust, 60 percent decrease
The best-performing mutual funds:
» Forester Value Fund, 0.82 percent increase
» Copley Fund, 17 percent decrease
Source: Morningstar Inc.
Bill Miller’s Legg Mason Opportunity Trust dropped 65 percent this year, the worst performance of any U.S. stock fund with at least $100 million in assets according to Chicago-based Morningstar.
Miller’s other fund, the vaunted Value Trust, beat the S&P 500 Index for 15 straight years until 2006. But last year, Legg Mason’s flagship mutual fund lost 57 percent through Dec. 29.
A second Legg fund, the Growth Trust, also made Morningstar’s list of the three worst-performing funds, down 61 percent. The Growth Trust is managed by Robert Hagstrom, a member of Miller’s Legg Mason Capital Management team.
The funds were hurt by bad bets on companies that were, in hindsight, among the least desirable in 2008. The Value and Growth Trusts each took large stakes in Freddie Mac and AIG, both of which required intervention by the federal government to stay afloat. The Opportunity Trust included stock in Countrywide Financial, which was bought by Bank of America Corp., and IndyMac Bancorp., which was declared insolvent and seized by federal authorities.
Miller enjoys strong support from Legg Mason Chairman and Chief Executive Officer Mark Fetting, who took over both positions last year. But in a November commentary on the market, Miller owned up to the funds’ performance.
“The fact that all investors have gone through periods of substantial underperformance is of little consolation,” Miller wrote. “We have not met your expectations or our own, and we apologize for that.”
