Now, securities are spread across more industries and the largest holdings make up less than 4 percent of the portfolio.

The biggest holding at the end of May was JP Morgan Chase & Co., making up 3.72 percent of the portfolio, followed by Apple Inc. and Ford Motor Co. at about 3.4 percent.

And while some holdings are less conventional, such as Ford or Citigroup Inc., others like JP Morgan and Blackrock Inc. are commonly owned by similar funds, Hughes said.

"Some of that was intentional. Sam Peters wanted to broaden out the portfolio and at the same time be true to the valuation model," Hughes said. "The performance shouldn't be as wild as it was, but whether or not that that evens out to a long-term advantage for investors, it's too early to make that call."

Morningstar gives Value Trust a low single star rating out of a possible five because of its poor performance record over three, five and 10 years. Analysts also rate the fund "neutral."

"We think the fund has been moderated enough. It isn't going to blow investors up like it did in 2008," Hughes said.

That year, while the market dropped 37 percent, Value Trust plunged 55 percent.

At the same time, Hughes said, questions remain about whether Value Trust can win back investors, and how much time Legg will give it before possibly merging it into another fund.

"You'd like to see those redemptions reversed, and that will happen with performance," she said. "One year is not going to be enough for everyone to come back."

The fund's three-year track record puts it in the bottom 25 percent among its peers, according to Morningstar.

Peters acknowledged the challenges and pressures to boost long-term performance. He noted that stocks still scare investors, many of whom remain in fixed-income or bond-like equities.

"There has been a flight to safety bubble," he said. But "people will come back to active stock picking."

Peters believes in cycles, something he learned from his grandmother, his first financial mentor.

He grew up in New Mexico, where his great-great grandfather started a cattle ranch in the late 1880s that is still run by his extended family. "It makes the outback of Australia look lush," said Peters, who turned 44 last week.

His branch of the family gravitated toward the business side, while cousins handle day-to-day operations of the ranch, which spans hundreds of thousands of acres in the Chihuahuan Desert.

Peters' grandmother handled investments, including oil and gas leases on the ranch and elsewhere.

"She just taught me about cycles. Her basic line was, 'No matter what, everything cycles,' " Peters said.

He said he's seen that play out time and again, with investor mood shifting from extreme optimism to deep pessimism and back again. "You learn to bet the other way," he said.

Peters earned an undergraduate degree in economics from the College of William & Mary in 1991 and an MBA from the University of Chicago in 1999. He worked as a financial consultant for a New Mexico brokerage firm and then in 1999 moved to the fund giant Fidelity, where he managed health care and electronics funds. The chance to work with Miller attracted him to Legg, he said.

When announcing Peters as his replacement at Value Trust, Miller commended the younger manager's "steady hand" during the financial crisis.

"There is no upside to panic," said Peters, adding that he focuses on what he can control. "This was another thing I learned from my grandmother: Don't hide from issues and challenges, and find people who do the same thing."