Q. Is Hartford Dividend & Growth Fund worth investing in? -- V.L., via the Internet
A. Large-capitalization value funds have had a tough time of it, but this one has done much better than most of them.
A primary reason is that it embraced energy stocks and kept financial holdings relatively low. It moved money into natural gas firms such as XTO Energy Inc. and benefited from rebounds of large-company stocks such as International Business Machines Corp. and Wal-Mart Stores Inc.
The $4 billion Hartford Dividend & Growth Fund "A" (IHGIX) is down 9 percent over the past 12 months, and its three-year annualized return is 6 percent. Both results rank in the top 11 percent of large-cap value funds.
It has a 1.09 percent annual expense ratio.
"With the caveat that it could be cheaper, I recommend this fund because it is a strong performer that could be a good anchor for a portfolio over time," said Paul Herbert, analyst with Morningstar Inc. in Chicago. "It is buying stocks to hold and focuses on established companies."
Edward Bousa of subadviser Wellington Management has been portfolio manager since 2001. He was previously with Putnam and Fidelity, where he built solid records. Emphasizing dividend-paying stocks, Bousa keeps his position sizes small to reduce risk and makes judicious sector bets versus the overall market. The fund's price volatility is low.
"Wellington Management is a highly respected money manager that has a lot of analysts with a lot of experience, which should help this fund over time," Herbert said. "I actually think Growth & Dividend would be a better name for this fund, since most of your return will be from capital appreciation in the stocks in its portfolio, with the dividend secondary."
Among its largest concentrations, energy represents 21 percent of assets, industrial materials 15 percent, health care 12 percent and financial services 12 percent. Foreign stocks represent about 15 percent of the portfolio. Top holdings are Chevron Corp., AT&T Inc., Exxon Mobil Corp., IBM, Total SA, General Electric Co., Exelon Corp., Eli Lilly & Co., Wal-Mart and Encana Corp.
Hartford Dividend & Growth Fund has a 5.5 percent "load" (sales charge) and requires a $1,000 minimum initial investment.
Q. What has been the best-performing stock sector over the past 10 years? Can it make sense to invest in sectors if you pick a winning sector? -- C.D., via the Internet
A. Energy has been the best-performing stock sector (group of industries) the past 10 years, with an annual compound growth rate of 12.8 percent, according to Standard & Poor's Corp.
Second is materials at 7.2 percent, followed by industrials at 5.5 percent. Telecommunications is the worst-performing, with a 4 percent decline.
Although some investors have profited with a system of investing in strong sectors, it is a tricky business usually best left to professionals.
"There are lots of techniques for investing in sectors, but many people give up because not every technique works all the time," said Sam Stovall, S&P senior investment strategist, who trades among sectors using exchange-traded funds.
Stovall's technique is to invest in the three sectors with the strongest trailing 12-month price performance and avoid those with the lowest 12-month performance. He examines those sectors each month and rotates his portfolio into sectors meeting his criteria. That system requires rotating among sectors at least once a quarter, he said.