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The Slow and Steady passive portfolio update: Q1 2024

How quickly things can change! Another bumper quarter for global equities has helped to chase the blues away like a glimpse of spring sun.

Our Slow & Steady model portfolio has plumped up 3.7% in the last three months [1]. That’s on top of the 7% gain the quarter before that.

Overall, annualised returns are now back to a healthy 7%. Call it 4% after inflation. If you own an equity-heavy passive portfolio you’ll be happier still.

Here are the numbers, in Zippity-Doo-Dah-o-vision™:


The Slow & Steady portfolio is Monevator’s model passive investing [3] portfolio. It was set up at the start of 2011 with £3,000. An extra £1,264 is invested every quarter into a diversified set of index funds, tilted towards equities. You can read the origin story [4] and find all the previous passive portfolio posts [5] in the Monevator vaults.

While much of Q4’s rise was accounted for by a surge in government bonds and property they’ve both subsided a little since.

Instead we’re back to the established routine: US large caps as the motor of our passive portfolio.

Our Developed World fund had approximately 50% in the US when we first invested back in 2011. Now that allocation has climbed to over 70% – a worryingly high exposure to a richly-valued stock market [6] and an economy stoked on government stimulus.

The Investor wrote an excellent piece [7] for Mavens [8] on how to think through this situation, including your options for taking evasive action.

He also turned up a Larry Swedroe article [9] on just how hot the US market would have to run to repeat the returns of the last decade.

In short: we’d need a Tech Bubble Part II to get anywhere close.

Needless to say I won’t be selling the Slow & Steady’s equity allocation to plough it 100% into an S&P 500 ETF [10] anytime soon.

However neither am I about to advocate for a wholesale shift into a World ex-US [11] tracker.

American idle

For one thing, the Slow & Steady portfolio is only 28% US large caps when you take the whole portfolio into account.

And even if we did dilute the Developed World fund’s US holding back down to the 50% level where we first invested, the US large cap allocation would only be reduced to 20% of the total portfolio.

Said differently – the portfolio is already adequately diversified. If Big Tech’s future returns are sub-par, a 28% to 20% shift won’t make a huge difference.

Secondly, nobody is predicting negative returns for the US. Just that the market must surely mean revert – and that some other region must surely take the lead for a while – because the S&P 500 doesn’t win every decade.

I’ve been reading predictions like this for more than a decade. Nobody can make a strong case for any other market besides, “it’s cheap.”

Mean reversion is not a physical law. It’s a pattern found in the last 100 years of data. It doesn’t mean that cheap markets can’t get cheaper.

The Russian market looked awesome value before the Ukraine War. I’m glad I didn’t bet my shirt on those stocks.

In my personal portfolio, I siphoned off cash to deploy in emerging markets and UK equities for years because they were cheap. That hasn’t worked.

It did teach me a useful lesson about trying to outwit the market though.

I can’t do it.

New transactions

Every quarter we nourish our portfolio with £1,264 of investment fertiliser. This fresh muck and brass is split between our portfolio’s seven funds, according to our predetermined asset allocation.

We rebalance using Larry Swedroe’s 5/25 rule [12]. That hasn’t been activated this quarter, so the trades play out as follows:

UK equity

Vanguard FTSE UK All-Share Index Trust – OCF [13] 0.06%

Fund identifier: GB00B3X7QG63

New purchase: £63.20

Buy 0.24 units @ £262.85

Target allocation: 5%

Developed world ex-UK equities

Vanguard FTSE Developed World ex-UK Equity Index Fund – OCF 0.14%

Fund identifier: GB00B59G4Q73

New purchase: £467.68

Buy 0.722 units @ £647.54

Target allocation: 37%

Global small cap equities

Vanguard Global Small-Cap Index Fund – OCF 0.29%

Fund identifier: IE00B3X1NT05

New purchase: £63.20

Buy 0.148 units @ £428.36

Target allocation: 5%

Emerging market equities

iShares Emerging Markets Equity Index Fund D – OCF 0.19%

Fund identifier: GB00B84DY642

New purchase: £101.12

Buy 53.63 units @ £1.89

Target allocation: 8%

Global property

iShares Environment & Low Carbon Tilt Real Estate Index Fund – OCF 0.18%

Fund identifier: GB00B5BFJG71

New purchase: £63.20

Buy 27.95 units @ £2.26

Target allocation: 5%

UK gilts

Vanguard UK Government Bond Index – OCF 0.12%

Fund identifier: IE00B1S75374

New purchase: £316

Buy 2.355 units @ £134.21

Target allocation: 25%

Global inflation-linked bonds [14]

Royal London Short Duration Global Index-Linked Fund – OCF 0.27%

Fund identifier: GB00BD050F05

New purchase: £189.60

Buy 179.546 units @ £1.056

Target allocation: 15%

New investment contribution = £1,264

Trading cost = £0

Take a look at our broker comparison [15] table for your best investment account options. InvestEngine [16] is currently cheapest if you’re happy to invest only in ETFs. Or learn more about choosing the cheapest stocks and shares ISA [17] for your circumstances.

Average portfolio OCF = 0.16%

If this all seems too complicated check out our best multi-asset fund [18] picks. These include all-in-one diversified portfolios, such as the Vanguard LifeStrategy funds [19].

Interested in tracking your own portfolio or using the Slow & Steady investment tracking spreadsheet? Our piece on portfolio tracking [20] shows you how.

Finally, learn more about why we think most people are best choosing passive vs active investing [21].

Take it steady,

The Accumulator