The fund has large weightings in some pretty big losers like Sprint Nextel, United Healthcare, Amazon and Aetna. It has large weights in a couple of big winners too; Qwest and AES Corp.
I was struck by one thing in the Barron's article which was that the fund has no exposure to energy. Mr. Miller believes that current prices are not sustainable. If you have read this blog for any length of time you know I generally am bullish on energy and while I don't know about $75 I feel confident oil will be above $65 much more often than it is below for the foreseeable future.
Being wrong about energy does not make the fund a sale. The track record is outstanding where the S&P 500 is concerned and the occasional bad year goes with the territory of money management.
One thing that does not seem to come up very often with the fund that is worth considering is that its track record against large cap value is not quite as stellar as it is vs. the S&P 500.
As the chart shows it has generally outperformed the iShares Russell 1000 Value Fund (IWD) but the value added is much less than vs. the S&P 500.You can decide for yourself whether you have any interest in this fund (I do not) but the lack of energy makes an important point.
If you use actively managed funds and believe in diversification you need to know where your funds are overweight and underweight and build in accordingly. Then keep tabs on the sector weights to make further changes in reaction to changes made within your funds.
8 comments:
I had been in this fund for about 10 years up until last year. The problem is that they added a new fee to my account. I thought I would have been been grandfathered into not getting the fee assessed. When I called they said that everyone was complaining about the fee as it was only disclosed in one of those mailings in 3 point type.
I've been contemplating using a service for macro sector guidance like Morningstar or Birinyi (mostly because I am to busy and unmotivated to do my own research). What criteria would you set out as a means of comparison of a group of like,paid for , investment sites? Tom in Indy
Tom,
Truthfully I have never thought about doing something like this so I'm not sure I have an answer to your question.
For a value fund that one has some odd picks. A bunch of HMOs and internet stocks. I thought value funds liked tobacco, intergrated oil, etc. Looks more like a growth fund.
I would not bet against Bill. He wrote a long piece telling how over priced energy is. I agree. There are tankers and more tankers filled to the brim. When the price breaks, the fall is going to last a long while. Saudi Arabia is just one place that is drilling like mad. The Saudis expect to increase production to 12 million barrels per day by 2008. Over the next three years, they expect to drill 1,500 new wells. In the mean time, the economic slow down will reduce demand. Look for a big drop with any hint that Iran will comply with the UN resolution.
Storage is full because supply is so precarious.
Either you find the Saudis credible and acting in good faith or you don't. I would need independent confirmation if they told me the sky was blue.
All the big elephant fields are old and in decline. They aren't going to find anymore.
Agreed though, oil could crater crash and collapse all the way to $60.
I have been using Morningstar Portfolio X-Ray to analyze my mutual fund portfolio diversification along several dimensions - sector, market cap, country ownership and more. The tool also highlights any sectors that are over or under represented. Premium feature unfortunately.
Barrons is always pumping Bill Miller and his stocks before each quarter ends. Just keep this in mind at the end of Sep and Dec.
All I can say is that Miller has been buying EK while the rest of the universe has been selling. I think his streak is coming to an end this year.
How do you like my Russia call a while back (long LETRX since 49). Looks like it may be getting toppy. If commodities hold then things should keep looking up over there.
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