Well, Bill Miller of Legg Mason Value Trust has done it again, beat the S & P 500 that is. He has now beaten the S & P 500 15 years in a row. But why is this news? I was under the impression that the vast majority of mutual fund managers consistently beat their benchmark index, if this is so than why is it a big deal that a mutual fund manager did what he is SUPPOSED to do?
The mere fact that the press and investment community celebrates the fact that ONE mutual fund manager has consistently beat his benchmark is another point of proof that active money management is a loser's game.
What is more interesting is the fact that more money managers should be beating their benchmark than actually are. Even in an efficient market there will be those managers who are lucky and will beat their benchmark by no skill of their own, statistically speaking their should be more than just one. It is quite telling that beating the S & P 500 for 15 years is news. What would really be news is if the majority of managers beat their benchmarks consistently for 15 years.....but of course that could never happen.
Scott Dauenhauer, CFP, MSFP
P.S. Though Bill Miller beat the S & P 500 he did not beat a diversified portfolio of stocks.
