Fund Times: Miller Beats S&P 15th Year in a Row

Bill Miller has done it again, but it was a close call. Miller's  Legg Mason Value (LMVTX) extended its winning streak against the S&P 500 Index to 15 straight years, with a 2005 return of 5.32%. The S&P 500 returned 4.91% for the year.

Miller's aversion to commodity producers, specifically energy stocks, meant he had an uphill climb in 2005. In addition, duds like  Tyco International   and  eBay (EBAY) added to the challenge. However, big bets on  Google (GOOG) and  UnitedHealth Group (UNH) won the day.

Those stocks nicely illustrate Miller's style. He believes that you have to stick your neck out on controversial or at least misunderstood names to beat the market. EBay and Google are bold bets because their multiples are so steep that they need nearly flawless execution to produce good returns for shareholders. Yet, Miller will also buy fallen growth stocks where controversy has frightened off less-secure money managers. Hence, Tyco and UnitedHealth.

While his streak against the S&P 500 is a fun way to keep score of Miller's accomplishments, his goals revolve around long-term success versus the market. The consistency of his record helps to keep investors in, but his 10-year return is more impressive. The fund has gained an annualized 15.19% over that period, which is about 6 percentage points per year better than the index. For more perspective on the streak, read Chris Traulsen's Fund Spy column from November 2005.

Vanguard Hikes Fees on Wellington
Vanguard Tuesday filed a new fee schedule for  Vanguard Wellington (VWELX), which will result in a one-basis-point fee hike for Wellington's Admiral shares (ticker: (VWENX)). The expense ratio of the retail share class will remain at 0.31%, while the cost of the Admiral shares rises from 0.17% to 0.18%.

The new arrangement moves the breakpoints on Wellington's management fee so that it takes more assets to reach certain breakpoints. As before, subadvisor Wellington will be paid 0.10% on the first $1 billion in assets, but the next breakpoint doesn't come until another $9 billion flows into the fund. Previously, it took just $2 billion more to reach the breakpoint of 0.05%.

In addition, Wellington will now be paid 0.04% for assets above $10 billion, compared with 0.03% previously. The fund's current asset level is $38 billion.

Mellon Combines Dreyfus with Institutional Group
 Mellon Financial Corp.  announced Tuesday that it has combined its Dreyfus Mutual Fund unit with its Institutional Asset Management sector to create a new combined organization named Mellon Asset Management. Vice chairman Ronald P. O’Hanley will lead the combined sector and vice chairman Stephen E. Canter, who remains chairman and chief executive officer of Dreyfus, will report to O’Hanley.

The move isn't a big surprise, as Dreyfus has moved much of its money management responsibilities from Dreyfus managers to Mellon's in-house institutional managers.

Latin America Leads Way in 2005
The best mutual fund category in 2005 was Latin America stock. Driven by soaring oil and precious-metals prices, Latin America funds returned 53.82%, according to preliminary year-end data. Natural-resources funds gained 38.08% and Japan was third with an average return of 32.59%.

The worst-performing category was the bear-market group with a loss of 4.4%, followed by world bond, which lost 3.19%, and muni single-state short, which managed a 0.93% gain in 2005.

Old Mutual Names Subadvisors
Old Mutual has named a slew of subadvisors to run funds formerly known as PBHG.  Three funds, Old Mutual Focused (OBFVX),  Old Mutual Large Cap , and  Old Mutual Mid Cap , will remain with manager Jerome Heppelmann and Liberty Ridge. Liberty Ridge will also run a slice of Old Mutual Strategic Small Company  along with Eagle Asset Management and Copper Rock. Liberty Ridge and Eagle will split duties on Old Mutual Small Cap .

Turner Investment Partners and CastleArk will each manage half of Old Mutual Large Cap Growth , Old Mutual Large Cap Growth Concentrated , and Old Mutual Select Growth . Old Mutual Growth  will be comanaged by Turner and Munder Capital Management.

Columbus Circle will manage Old Mutual Technology & Communication .

Barrow Hanley will run  Old Mutual Clipper Focus (OBFOX).