Tags: Investment | tips | Bill Miller | risks

Legg Mason's Bill Miller: Investors Will Avoid Risks for Many Years to Come

By    |   Thursday, 27 March 2014 06:06 PM

Legendary mutual-fund manager Bill Miller, chief investment officer of Legg Mason Capital Management, offers several investment suggestions on CNBC.com.

Investors are showing an extreme aversion to risk, and that "looks likely to continue for many years," he writes.

"[This] risk aversion has led many equity mutual-fund managers to become closet indexers, as they fear the loss of assets and employment should their returns fall below those of the benchmark."

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So if you're going to invest in an actively-managed mutual fund, make sure that its portfolio really does differ from an index, Miller says.

Still, he sees potential for active managers.

"The institutionalization of the hedge-fund industry, such that low volatility is often more important than excess returns, means that the opportunities for truly active managers who think independently and are able to take advantage of the behavioral foibles of others are great," Miller writes.

He urges caution in investing in hedge funds and private equity funds, because of high fees and a low-return environment. "If you are thinking about those products, consider their publicly traded management companies instead," Miller says.

Backing up Miller's point about risk aversion, a recent survey by Wells Fargo Private Bank of 500 of its affluent customers found that one-third are still wary of investing in stocks, despite the five-year-old bull market, according to USA Today.

The 2008-09 financial crisis "is still a factor in how much stock they are willing to own," the poll determined.

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Legendary mutual-fund manager Bill Miller, chief investment officer of Legg Mason Capital Management, offers several investment suggestions on CNBC.com.
Investment,tips,Bill Miller,risks
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2014-06-27
Thursday, 27 March 2014 06:06 PM
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