Star Fund Managers Stumble

There is much disagreement over whether the stock market is efficient and what level of efficiency exists. Even if it is argued that the market is inefficient, it is still very difficult to identify those who can consistently beat the market as the recent performance of several well-known star mutual fund managers shows. For example, Bill Miller showed holes in his performance in 2008 when the Legg Mason Capital Value Trust fell 55 percent. Even worse, as the S&P 500 has fallen about 9.2 percent this year, the Legg Mason Opportunity fund, which he currently manages, is already down about 28 percent. Similarly, the Baron Partners fund is down about 24 percent for the year, the Federated Kaufman fund is down about 21 percent, and the Jacob Small Cap Growth fund is down about 27 percent. Each of the managers of these funds has been touted as a star manager during their career, but it appears none will be a star this year.