I Don’t know about you but I’ve forgotten all about the AI bubble since the Iran war started. So this is something.
However, every fund we have is declining since Trump went crazy slow and steady The passive portfolio still managed to post a 2% gain since our last check-in three months ago.
Trump go boom-boom
What happened to the portfolio’s equity funds since the beginning of the year:
Chart from Morningstar. Nominal Annual Total Returns (GBP).
This chart is as good an example as you could get of how trying to predict the market is a colossal waste of time.
Everything was going well until the bombs started falling on 28 February. No bomb – no reason for the market to fall.
Was Trump’s decision predictable? Fundamentally, no.
You could argue that the presence of a US carrier strike group in the Gulf means something is up. But look at the turning point on the chart. Had a deal been struck before February 28, equities would likely have continued to rise.
Anyway, the fingers were the quickest to hit the ‘Sell’ button when the market opened on March 2.
No one knew in advance how the war cookie was going to collapse. Apart from a few lucky people who took some – ahem – boli flutter Certainly on the prediction markets.
How were bonds formed?
I’m so glad you asked! Here’s its year-to-date performance slow and steady The much-awaited defensive partnership of the portfolio:
Linkers = government bonds linked to a world index hedged against GBP. Gilts = nominal UK government bonds (all stocks).
Nominal government bonds do not like inflationary supply shocks – as we saw in 2022.
So they are down again, and having a meltdown to their liking. (Think something more along the lines of the dotcom bust or the Global Financial Crisis, where demand and liquidity dried up.)
More pleasingly, our index-linked bond fund looks pretty solid.
For one thing it’s a short-term bond fund, which makes it inherently less volatile than a longer-term gilt tracker. Plus, it’s loaded with inflation-linked bonds. So you would expect it to do tolerably well when the consumer price index goes up.
That said, the same fund could not cover its glory in 2022. Read our individual index-linked gilt vs linker fund comparison for the awesome details.
Although it took a while to surface, the biggest weakness of our passive portfolio has proven to be a lack of defensive diversification. If I were starting over now, our model portfolio would also include cash, gold and commodities.
Commodities are one asset that is positively booming at the moment.
portfolio raw numbers time
What? Do you think I’m procrastinating? Well, maybe I have… Here’s the latest score-on-the-door brought to you by CrisisWhatCrisis-o-vision:
slow and steady Is of monevator Model passive investment portfolios. It was founded in early 2011 with £3,000. An additional £1,360 each quarter is invested in a diverse set of equity-leaning index funds. You can read the original story and find all previous Inactive Portfolio posts Monevator Safes. Previous quarterly installments can be found here.
All returns in this post are nominal GBP total returns unless otherwise stated. Subtract approximately 3% from the portfolio’s annual performance figure to estimate real returns after inflation.
The total annual return of the portfolio since inception is 7.36%. Reduce average inflation And the real return over this period is around 4.5%.
That will do well. The average annual real return for a 60/40 world/gilt portfolio since 1900 is 4%.
The story over the life of the portfolio has essentially been that equity returns are good, bond returns are bad.
grind the result
It’s easy to disappear from sight, but slow and steady In 15 years it has grown from £3,000 to over £100,000.
That said, this figure puts the model portfolio well above the average £80,000 held in pension assets by people in my age group. 2025 analysis Of ONS data.
Furthermore, this six-figure sum was achieved with relatively modest monthly contributions (£250 per month in 2010 money) and zero pension tax relief. (This assumes the portfolio is held in an ISA.)
No fancy funds or strategies were used. No leverage or market timing. No kung-fu or expert knowledge required.
All one had to do was follow the rules of a straightforward passive investing strategy and keep the faith for a long time for it to bear fruit. (This is a difficult thing.)
It works and there is no need to think too much about it.
long term picture
The next chart shows the growth path of the portfolio, along with the various setbacks encountered along the way:
That’s a boring chart. It seems as if nothing happened. The portfolio has moved slowly, and world events failed to topple it again for more than nine months. We shrugged off every drop of fear.
He said, our model portfolio is still below the peak of December 2021 Real Conditions (see light green line). This shows how dangerous inflation can be.
Fund/Asset Class Returns
Here are the details of individual fund performance of the portfolio considering short and long term:
| Fund | YTD(%) | 1 year (%) | 10 years (%) |
|---|---|---|---|
| emerging markets | 5.7 | 34.5 | 9.1 |
| real estate | 5.3 | 14.5 | 3.9 |
| world east britain | 1.8 | 28.8 | 13.4 |
| uk equity | 7.5 | 36.8 | 9.1 |
| world small hat | 7 | 37.4 | 10.6 |
| UK government bonds | -1.2 | 3 | -1.2 |
| inflation linked bonds | 1.7 | 5.6 | 2.4 |
Data from Morningstar. Nominal Total Returns (GBP). The 10-year figure is annualized.
The short-term outlook tells us that equity diversification is back in vogue. Emerging markets and UK equities have beaten the MSCI World – and even the S&P 500 – over the past two years.
How many people don’t even look at UK equities anymore because the British economy appears moribund and the S&P 500 has thrashed all stocks for years?
Stop chasing performance, guys!
Okay, enough tilting at windmills for an update.
new transactions
Every quarter we throw away £1,360 worth of red meat to the wild dogs of the market. Our stake is divided among our seven funds, as per our predetermined asset allocation.
We rebalance using Larry Swedroe’s 5/25 rule. It has not been activated this quarter, so trades will be as follows:
emerging market equities
iShares Emerging Markets Equity Index Fund D – OCF 0.19%
Fund identifier: GB00B84DY642
New purchase: £108.80
Buy 42.2377 units at £2.58
global wealth
iShares Environment & Low Carbon Tilt Real Estate Index Fund – OCF 0.17%
Fund identifier: GB00B5BFJG71
New purchase: £68
Buy 27.2076 units at £2.50
Developed World Ex-UK Equity
Vanguard FTSE Developed World ex-UK Equity Index Fund – OCF 0.14%
Fund identifier: GB00B59G4Q73
New purchase: £503.20
Buy 0.6141 units at £819.40
uk equity
Vanguard FTSE UK All-Share Index Trust – OCF 0.06%
Fund identifier: GB00B3X7QG63
New purchase: £68
Buy 0.1848 units at £367.93
global small cap equities
Vanguard Global Small-Cap Index Fund – OCF 0.29%
Fund identifier: IE00B3X1NT05
New purchase: £68
Buy 0.1272 units at £534.69
uk gilts
Vanguard UK Government Bond Index – OCF 0.12%
Fund identifier: IE00B1S75374
New purchase: £285.60
Buy 2.1073 units at £135.53
global inflation linked bonds
Royal London Short Duration Global Index-Linked Fund – OCF 0.27%
Fund identifier: GB00BD050F05
New purchase: £258.40
Buy 234.2702 units at £1.103
new investment Contribution = £1,360
trading costs = £0
Average Portfolio OCF = 0.17%
user manual
Disclosure: Links on the Platform may be affiliate links, where we may earn commission. This article is not personal financial advice. When investing, your capital is at risk and you may get back less than you invested. Other fees may also apply with commission-free brokers. View terms and fees. Past performance does not guarantee future results.
Take a look at our broker comparison table for your best investment account options.
Or learn more about choosing the cheapest Stocks and Shares ISA for your situation.
If that sounds too complicated, check out our best multi-asset fund picks. These include all-in-one diversified portfolios like Vanguard LifeStrategy Fund.
You might also enjoy a refresher on why we think most people are better off choosing passive vs. active investing.
keep it steady,
accumulator
