VIEW-Poor results signal trouble for Legg's Miller

By Muralikumar Anantharaman

BOSTON (Reuters) - Legg Mason's once-celebrated Value Trust fund is set for its worst-ever annual returns in 2008, and some investors grumble that time is running out for its manager, Bill Miller.

The flagship stock mutual fund lost 57 percent in the year to December 29, the worst in its class and underperforming the Standard & Poor's 500 Index for the third straight year following the S&P 500's 39.4 percent loss.

The losses are so big, the fund now trails the benchmark S&P 500 Index over not just one year but over three, five and 10 years. It is barely ahead over 15 years.

Hemorrhaging assets, its size has shriveled to about $4.3 billion (2.9 billion pounds) at the end of November from more than $20 billion in mid-2007.

Miller's luster is fading. The 58-year-old made his and Legg Mason's name as the only manager to beat the S&P 500 Index 15 years in a row until 2006 with bold portfolio picks that once characterized the Value Trust.

"Either he turns it around next year, or probably something happens. If it doesn't work for him in the next year, probably in 2010 he'll be asked to retire," said an analyst who owns Legg shares at a Washington, D.C.-based hedge fund and who declined to be identified so he could speak candidly.

The $1.3 billion Opportunity Trust that Miller manages has fared worse, losing 66.9 percent in 2008 and suffering the ignominy of the worst performance in its category according to research firm Lipper Inc, a unit of Thomson Reuters.

Miller, who has enjoyed strong backing from Legg Mason Chairman and Chief Executive Mark Fetting, is to gain additional responsibilities from January 1 when he joins a team to manage the Legg Mason Partners All Cap Fund at the Baltimore-based asset management company.