The Standard and Poor's 500 index is a benchmark many investors try to beat.
But a leading fund manager told area investors that mimicking the returns of that index, while trying to maintain a diversified portfolio, presents constant challenges.
Rand Alexander manages more than $18 billion for The Hartford Fund through its Hartford Global Leaders, Advisers and Stock funds. He visited the Augusta Sheraton on Wednesday on behalf of several investment agencies and banks to talk about the portfolio.
"We're trying to beat the S&P 500, but it hasn't been that easy over the last seven years," Mr. Alexander said. "It seems like there's only been one game in town, and that's technology. But there's other games in town. They may be in sectors nobody wants, but they're not going to be going out of business any time soon."
Only eight stocks on the S&P 500 accounted for 50 percent of the index's gains, he said, largely because of technology growth. And even though the Hartford portfolio included six of those eight high-performing stocks, it still did not see enough gains to empower his fund's performance beyond the S&P.
But such is the price for maintaining a diversified portfolio, he said.
"You shouldn't only invest in one sector, even if that sector is going up and it looks like it's going to keep going up," Mr. Alexander said. "Make sure you're not skewed only to what's happening today."
That's one reason he's investing in energy. Higher oil prices have boosted the stock performance of these companies. While many economists expect oil prices to come back down, Mr. Alexander disagrees and expects demand to increase globally, edging inflation up slightly.
The issues he grapples with on a day-to-day basis don't differ much from the concerns of most everyday investors.
He appreciates the benefits of the current strong economy and low inflation, and the recent successes of technology-related businesses. But he is concerned about their long-term stability.
His solution? Placing importance on companies with strong brands, forward-looking managers and, perhaps most vital, those that could merge.
"Mergers are crucial, and we think they are going to continue to be crucial," Mr. Alexander said. "We want to own these companies because they represent revenue growth and bottom line growth."
Heidi Coryell at (706) 823-3215.