A Quilt as Beautiful as the Autumn Leaves
By Colleen Gillespie, CTFA, AIF®
As we approach the mid-term elections, we will continue to see days, sometimes even intra-day swings in the markets. Gas prices increasing; the Federal Reserve raising rates on concerns about inflation; then inflation reports coming in softer than expected. All of these news flashes impact portfolios, sometimes on a daily basis.
So, how do we build a portfolio to protect your hard-earned money from rising and falling with the tides? Diversification is how. Above is the Callan Periodical Table of Investment Returns, also known as “the quilt” that shows how asset classes performed on an annual basis. Each color is an asset class that has a job to do for you and I challenge anyone to find a pattern in this colorful quilt! I selected this chart because it also shows the first six months of 2026 and why diversification and having a comprehensive investment process matters. Just as seasons change, so does the performance of each asset class.
Performance in four out of the six months of 2026 were led by emerging markets equities (think China, India, Brazil, Russia, etc.). For those that are moderate or aggressive investors, we have an allocation to many of the asset classes shown above, including emerging markets, in our portfolios. For those with a more conservative risk tolerance, we do not because of the added risk, but we do have an allocation to high yield bonds. It’s a balancing act between managing risk and getting the “slices of the pie” or colors of the quilt allocated properly.
The 1986 study of Brinson, Hood, and Beebower showed that over 90% of a portfolio’s performance is driven by asset allocation. Below is a pie chart showing the contributors to performance. You can see that market timing has the least effect, which is why we always tell clients to “stay the course” and “it’s not timing the market, it’s time in the market.” Our detailed investment process monitors all of the variables to keep you nice and cozy-warm under your portfolio’s quilt.
As always, if you have further questions or want to chat about your specific circumstances, please give us a call at 360-464-2025 to schedule a time to chat!
Disclosure/Disclaimer: Investment Advisory Services offered through Sawston Wealth Management, LLC. Investors are advised that past performance is no guarantee of future price appreciation. Securities, including stocks, bonds, and mutual funds held in your account are not guaranteed and involve investment risk, including possible loss of principal.