I forgot to update the portfolio! I’ve been leaning so hard into my passive investing persona that I fell asleep at my spreadsheet and didn’t twig when the 1 July Q2 deadline sailed by.
The markets are a distant background rumble to me right now. Oil price up, oil price down. Another day, another prophecy of AI doom.
It’s not that I don’t care. It’s just that the question being asked, it cannot be answered.
The question? Always being some variant of, “What’s the next big thing?”
Answers on a postcard
Here’s the story of the year so far, told in straight lines:
Data from justETF. The chosen ETFs are proxies for the Slow & Steady portfolio’s holdings, plus gold and commodities.
Gold is the loser year-to-date, commodities the winner.
Meanwhile, previously unloved emerging markets and property are the cream of the equities crop.
Who had that marked on their card for 2026?
Here’s the story again, told in wobbly lines of uncertainty:
Gold (red line) hit a new high in early March before dropping 23%.
Buying opportunity or time to get out?
Commodities (grey line) looks like it’s commanded by the Grand Old Duke of York. The changeable duffer perpetually marching his hard assets up and down hills. You want some?
Emerging markets (blue line) have now beaten the MSCI World over the last three years. That’s a comeback worthy of the WWE, given how the new challengers had been roundly pummelled by the developed market champs for 15 years following the Credit Crunch.
Me? I’m happy to own it all and let the chips fall where they may.
Portfolio-o-vision
Here’s the portfolio holdings and long-term annualised returns since kick-off in 2011.
The Slow & Steady is Monevator’s model passive investing portfolio. It was set up at the start of 2011 with £3,000. An extra £1,360 is invested every quarter into a diversified set of index funds, tilted towards equities. You can read the origin story and find all the previous passive portfolio posts in the Monevator vaults. Last quarter’s instalment can be found here.
All returns in this post are nominal GBP total returns unless otherwise stated. Subtract about 3% from the portfolio’s annualised performance figure to estimate the real return after inflation.
The full growth picture looks like this:
In real-terms, the portfolio is still 2.6% below its December 2021 peak. Another quarter or two of progress could push it to higher ground once more.
It has to be said though that we’re coming up for five years underwater since inflation spiralled. By contrast, recovery from the Global Financial Crisis took less than three years for a 60/40-type portfolio.
Unfortunately, trad 60/40 portfolios have a history of suffering like this during severe bouts of inflation. Consider adding some additional protection to yours.
New transactions
Every quarter we plough another £1,360 into the market’s black earth and hope we’ll harvest plenty of corn later. Our stake is split between our seven funds, according to our predetermined asset allocation.
We rebalance using Larry Swedroe’s 5/25 rule. That hasn’t been activated this quarter, so the trades play out as follows:
Emerging market equities
iShares Emerging Markets Equity Index Fund D – OCF 0.18%
Fund identifier: GB00B84DY642
New purchase: £108.80
Buy 40.8946 units @ £2.66
Global property
iShares Environment & Low Carbon Tilt Real Estate Index Fund – OCF 0.18%
Fund identifier: GB00B5BFJG71
New purchase: £68
Buy 25.5016 units @ £2.67
Developed world ex-UK equities
Vanguard FTSE Developed World ex-UK Equity Index Fund – OCF 0.14%
Fund identifier: GB00B59G4Q73
New purchase: £503.20
Buy 0.5631 units @ £893.61
UK equity
Vanguard FTSE UK All-Share Index Trust – OCF 0.06%
Fund identifier: GB00B3X7QG63
New purchase: £68
Buy 0.18 units @ £377.84
Global small cap equities
Vanguard Global Small-Cap Index Fund – OCF 0.29%
Fund identifier: IE00B3X1NT05
New purchase: £68
Buy 0.1189 units @ £572
UK gilts
Vanguard UK Government Bond Index – OCF 0.12%
Fund identifier: IE00B1S75374
New purchase: £285.60
Buy 2.1189 units @ £134.79
Royal London Short Duration Global Index-Linked Fund – OCF 0.27%
Fund identifier: GB00BD050F05
New purchase: £258.40 + £118.92 dividend
Buy 343.9562 units @ £1.097
New investment contribution = £1,360
Trading cost = £0
Average portfolio OCF = 0.17%
User manual
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Or learn more about choosing the cheapest stocks and shares ISA for your situation.
You might also enjoy a refresher on why we think most people are best choosing passive vs active investing.
Take it steady,
The Accumulator
I was asked during the GFC what was going to happen. I said I don’t know. I don’t know why you think I would know. And supposing I did know I don’t know why you think I would tell you.
Now 70ish% equity 25%ish bonds and several months worth of cash.
Apologies if this has been addressed before, but I’m surprised by the performance of the Royal London Short Duration Global Index Linked fund, which has an annualised return of 8.36% in the table for this quarter. Given the bond crash of 2022, this looks much higher than I would have expected. I know the Slow and Steady Portfolio switched from Vanguard UK Inflation-Linked Gilt Index Fund in Q1 2019 which had a great run until then (and carried on until 2022) so I guess the annualised return for the Royal London fund is a composite of the performance of the two funds. Even so, the annualised return seems higher than would be expected, so I wonder if I’m missing something (-:
@TA:
Interesting that S&S is still behind it’s real peak. I recovered about a year ago* and am now a bit ahead. Nasty stuff inflation!
P.S. I also estimate had I not started my DB when I did we would still be underwater by a few pp’s.
*our real peak was mid 2018 (although mid 2021 came very close), we were thus underwater for some seven years, which is quite sobering
@BBB – Heh, that sounds about right 🙂
@Julio – It was timely profit-taking from the long linker fund. Came out of that in March 2019. You’re right, the annualised returns are composite – asset class returns rather than individual fund returns. Every fund has been replaced since launch while linkers, property, and small cap asset classes were added later.
@Al Cam – Yes, I was quite stunned to see that 2022 has held back a portfolio like this longer than the GFC.
A straight 60/40 World/Gilts portfolio was in the black again last October. Looks like Small Cap, Emerging Markets and especially property have been the laggards in this case.
@TA:
Yup it is very interesting.
Having said that, in my case there are several key differences to a straight accumulation portfolio, specifically: no new contributions and withdrawals too.
@TA – Thanks, that makes sense. I used to follow monevator around 2011-2012 and returned towards the end of last year so there’s a lot to catch up on!
In the meantime my portfolio suffered a similar fate in that real returns hit a high point in August 2021 and didn’t return to that point till 4 years later. Quite a sobering period.
@TA:
For completeness, my new contributions ceased at the end of 2016, when I jumped ship. To some extent I think this explains why our real peak was in 2018 and not 2021. That is, our Pot continued to grow from the end of 2016 (in real terms) until it didn’t – with no new money being added and withdrawals. FWIW, I did not anticipate that happening*. Then, once I started my DB** the Pot started to recover to now stand at an all time real high.
However, as xxd09 commented recently @M: “we have been living in good times re the stockmarket which helps immensely-a war and or a severe recession could alter things”.
*my baseline plan (prior to pulling the plug) forecast the Pot would steadily decline until I started my DB at which point the Pot should begin to recover
**a bit over three years ago (and several years earlier than my original/baseline planning) when coincidentally the Pot was near its lowest ever real point*** since I pulled the plug
***but not as low as my baseline planning had forecast
@TA:
Another (possibly?) interesting observation is that my DB pension boosted my Pots recovery from its all time low (since pulling the plug) – but in all likelihood did not cause that recovery. That is, by my calcs the Pot would have recovered even without the addition of the DB income; albeit the recovery would have been at a slower rate and the Pot would currently still be a few pp down on its mid 2018 high.
Not sure if this is significant – or not; but it is possibly noteworthy.
It is interesting to look back at how things have developed. Generally, an encouraging and positive position. Even some nasty market shocks in your time horizon have not done an immense amount of damage. Apart from the very first few data points, you have a positive real return throughout the timeline, and the covid and bond crashes affected what might have been rather than representing an actual loss.
I checked my own data to see how it compares. My timeline starts in 2015, and only a further net 4% has been invested in the portfolio up to now (at random intervals with some withdrawals, so difficult to back out). To April 2026 I have a net real return of 55%. Not as strong as the Slow and Steady portfolio with its extra 4 years, but I would argue perfectly acceptable.
But then I am a satisficer not an optimiser!
@old_eyes:
I make your Pot to have returned around 4%PA real since 2015. Could you be good enough to indicate your top-level allocation please? Thanks.
@Al Cam #10
For the period under discussion 60% Global equities, 10% commercial property, 10% short-duration index-linked bonds, 10% mix of UK gilts and global government bonds, 10% cash.
That is not exact, but broadly the portfolio.
More recently, split the equities 2/3 global market cap and 1/3 VHYG FTSE All World High Dividend. Basically to reduce my exposure to US tech stocks and increase exposure to other companies, some of which make stuff.
Probably leaving money on the table, but easier to sleep at night. We will see how it goes.
@old_eyes:
Thanks for those additional details. FWIW, by looking at my returns over the last nine plus years, I thought you would probably be about 60% E’s. Not sure I have ever worried much about “leaving money on the table”* and I definitely prefer sleeping too!
Had I pursued a much more active rising equity glidepath from around retirement (rather than passively just letting our allocation to E’s creep up by not conventionally rebalancing) I would be much nearer 60% E’s now. And, our Pot would almost certainly be ahead of where it is today without ever having started my DB.
Wonderful stuff hindsight; but things could always have taken another course – and insurance always comes at a cost.
Thanks again.
*I did finally ‘summon up the courage’ to estimate the opportunity cost of our chosen path [to that point] last year. Floor and upside (F&U) is known to be costly (vs say, SWR, 4%, etc) and taking a conservative approach to F & U can make it even more costly! Se be it.