Finance Case Study Essay

10387 Words Aug 3rd, 2015 42 Pages


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Bill Miller and Value Trust
Bill Miller’s success is so far off the charts that you have to ask whether it is superhuman. Quite simply, fund managers are not supposed to be this good. Is it mortal genius, or is it celestial luck?1

By the middle of 2005, Value Trust, an $11.2-billion mutual fund2 managed by
William H. (Bill) Miller III, had outperformed its benchmark index, the Standard &
Poor’s 500 Index (S&P 500), for an astonishing 14 years in a row. This record marked the longest streak of success for any manager in the mutual-fund industry; the next longest period of sustained performance was only half as long. For many fund managers, simply beating
…show more content…
Glassman, “More Than Pure Luck,” Washington Post, 14 January 2004, F-01.
A mutual fund was an investment vehicle that pooled the funds of individual investors to buy a portfolio of securities, stocks, bonds, and money-market instruments; investors owned a pro rata share of the overall investment portfolio.

This case was prepared by Sean D. Carr (MBA ‘03), under the supervision of Robert F. Bruner. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation. Copyright © (2005 by the University of Virginia Darden School Foundation, Charlottesville, VA.
All rights reserved. To order copies, send an e-mail to No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Darden School Foundation.




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Part One Setting Some Themes

high competition, easy entry, and informational efficiency, it would be extremely difficult to beat the market on a sustained basis. Observers wondered what might explain
Miller’s performance.

The U.S. Mutual-Fund Market3
The U.S. mutual-fund market was the largest in the world, accounting for half of the
$16.2 trillion in mutual-fund assets reported

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