Following each quarter close of 2014, Stephen Campisi, CFA, Director, Institutional Investments, U.S. Trust Bank of America Corporation, led a market update conference call for our members, providing a look at the quarter’s events and their effects on the investment markets, and guidance on how this information might be used in the fiduciary’s role as a steward of an organization’s financial assets.

Read the Q4 2014 Quarterly Market Update

Overall, Q4 2014 was a modest quarter and 2014 provided a modest return to investors, according to Steve Campisi on the February 17 conference call. He shared general thoughts on the Q4 market performance and then took a closer look at commodities, directing attention to the quilt chart (see below, or Table 5 of the Quarterly Market Update).

Quilt charts are so named by the investment industry because they are reminiscent of colorful block quilt patterns. Their purpose is to visually show performance of investments over time, and advisors often use it as a visual testament to the benefits of a diversified portfolio. Stocks, bonds, commodities, real estate, and any other kind of investment has the potential to swing wildly, and investing across asset classes will help you weather bear and bull markets.

The market update quilt chart shows the 10-year history of commodity performance. For example, if you follow industrial metals in the dark gray square over the past 10 years, you’ll note the vast range of its returns. Or, take a look at energy in the gold square. As Steve stated, “We are all enjoying a 40% drop of prices at the pump, but look at what that does to energy as an investment.” Energy was the lowest or second-lowest performing commodity for seven of the past 10 years and dropped precipitously from 2013 to 2014.

The take-away from this chart is to “avoid concentrations,” said Steve, bringing us back to the basic principle of diversification.

Talk to your advisor about available quilt charts for your investments. The visual aid will help all members of the board “see” your portfolio’s diversification, or the need for increased diversification, and not just among asset classes but possibly even within particular asset classes as well.

Senior Program Director Lauren Kotkin plans a range of educational programs for the Exponent Philanthropy community, including conferences, webinars, and conference calls. She also dedicates a portion of her time to managing our resources on investments. Previously, she worked at the Council on Foundations in the Family Foundation Services department. Lauren holds an undergraduate degree from Duke University and an M.Ed. from Lesley University, with a focus on using arts in education.