This isn’t the first time Miller has bet heavily on an optimistic outlook. His 15-year streak leading the Legg Mason Value Trust to better returns than the S&P 500 ended in 2006. His performance worsened as he wagered on financial stocks during the credit crisis, prompting a 55 percent decline in his fund in 2008. In 2012, Miller stepped down from the Value Trust, while staying on as the manager of the Opportunity fund.

“Legg Mason Opportunity Trust is in the top 1 percent in good times and the bottom 1 percent in bad,” said Todd Rosenbluth, director of mutual-fund research for S&P Capital IQ in New York. “It will do well in a strong economic environment and continuation of the housing recovery, but when markets get choppy or flat, it won’t have other kinds of securities to provide an offset.”

The fund delivered an annual 22 percent return over the past five years to beat 95 percent of rivals, according to data compiled by Bloomberg. In 2011, it fell 35 percent as the S&P 500 rose 2.1 percent.

Home Prices

Miller’s largest stake is insurer Genworth Financial Inc., at 3.9 percent of the portfolio as of March 31, according to Legg Mason Inc.’s website. The Richmond, Virginia-based firm’s stock doubled to $15.53 in 2013 as rising home prices helped its mortgage insurance unit post its first profit since 2007.

As home prices climb, mortgage insurers like Genworth will benefit as housing values support insurance claims and originate new business, according to Miller. U.S. home prices increased 12.9 percent in the 12 months through February, according to the S&P/Case-Shiller index of 20 cities.

Miller started ramping up his Genworth holding in 2012 when shares were about $5 as mortgage insurers were reimbursing lenders for losses stemming from a wave of defaults. Genworth shares closed at $17.81 in New York yesterday.

Homebuilders such as PulteGroup Inc. and Lennar Corp., both among Miller’s top 30 holdings, have been discounted because of their weak earnings. Miller said they are poised to grow 20 percent to 25 percent a year for as long as the next five years, and will outperform the S&P 500. They’ve both increased their share of the market and reduced costs to boost profits, he said.

Interest Rates

A sustained rise in interest rates could delay the housing rebound for about a year, Miller said. Borrowers would eventually get used to the higher rates and return to the market, he said, pointing to the housing boom in the late 1990s when people purchased homes even as rates averaged about 6 percent.