Legg Mason Investments has created the US equity fund, a unit trust that is managed by US-based fund manager Bill Miller.
This unit trust is an onshore mirror of the offshore value fund, which is in turn a mirror of Miller's fund for US investors, the Legg Mason value trust. Miller has managed the Legg Mason value trust since it was introduced in 1982 and will be assisted on the US equity fund by Mary Chris Gay.
The US equity fund aims for long-term capital growth by investing mainly in US large-caps, although a small percentage may go into mid-caps. Miller's investment management style is to look for stocks that he believes are trading below their potential value.
Valuations will be assessed by a team of sixteen fund managers and analysts, who will look at the current value of a company's future cash flow. Miller believes that analysing stock valuations without referring to the value of a business misses many mispriced stocks. Stocks will be sold when the share prices have increased and will be replaced by more undervalued stocks.
Miller and his team are likely to focus on financials, consumer goods, healthcare and industrials, with limited exposure to technology and telecoms sectors.
Any move towards an upturn in the US is likely to be slow, since the possibility of war with Iraq is casting a shadow over the economy. However, a slowly improving economy could throw up some attractive stocks at bargain prices.
According to Standard & Poor's the Legg Mason fund is ranked 38 out of 69 funds based on £1,000 invested on a bid-to-bid basis with net income reinvested over one year to January 10, 2003.