Trust is a universal truth when it comes to investing. Investors put trust in their advisors to manage their investments to the best of their ability to their agreed upon strategy. A key component of this trust is communication. What aspects of communication is D&A committed to and how is it executed?
D&A believes that quarterly investment reporting is critical to client communications. Markets ebb and flow continuously, but at each quarter-end D&A sends to all clients a detailed quarterly report. The quarterly report provides useful insight into how D&A has positioned their portfolios given their risk profile and other considerations and its performance.
One of our favorite charts to help communicate this information is our famous “bubble chart” (below). As you can see from this actual client chart from last year, it highlights the asset allocation weightings (the bubble size) and the periodic returns (the y-axis). This account targets a “moderate growth” risk profile including a 60% equity weighting and a 40% fixed income weighting.
Each holding in a client account is shown by its ticker symbol (e.g., IVV for the iShares S&P 500 ETF, SCHE for the Schwab Emerging Market Equity ETF, etc.) and the bubble size shows the relative weighting in the account (e.g., IVV is the largest bubble and Cash is the smallest bubble, etc.)
As I wrote to some clients for their 2024 Q3 reports,
Per the chart, all positions showed good positive returns during Q3 with small cap (SCHA), mid-cap (SCHM), international (SCHF), emerging markets (SCHE) and minimum volatility (USMV) leading the way. We are happy to see that these diversifying positions overtook the S&P 500 this quarter showing a broadening of market strength, though the S&P 500 still produced a strong return. Your fixed income investments performed well with positive returns as interest rates dipped and credit spreads narrowed during Q3.
This chart is useful because it summarizes in one chart the key leaders and laggards of return for the period studied with accompanying commentary.
At D&A, we believe that trust is earned not just through performance, but through transparency and consistent communication. Our quarterly reports—and tools like the bubble chart—are designed to give clients a clear, intuitive view of how their portfolios are positioned and performing. By combining data-driven insights with personalized commentary, we aim to keep our clients informed, confident, and engaged in their investment journey. Because when trust is built on clarity, it becomes the foundation for long-term success.
P.S. Extra credit is given to all readers who identify the source of the title, “Look to the Bubble”. It is a reference to the Seinfeld episode where Jerry talks about the black and white “cookie” as a source of unity and understanding. We like to think of our bubble chart in the same way: a simple, visual tool that brings clarity and insight to something as complex as investing.