I don’t know about you but I’ve forgotten all about the AI bubble since the Iran War started. So that’s something.
However, despite every fund we own falling back since Trump went nuts, the Slow & Steady passive portfolio has still managed to eke out a 2% gain since our last check-in three months ago.
Trump go boom-boom
Here’s what happened to the portfolio’s equity funds since the start of the year:
Chart from Morningstar. Nominal annualised total returns (GBP).
This chart is as good an example as you could wish for to show that attempting to predict the markets is a massive waste of time.
Everything was going great guns until bombs started dropping on 28 February. No bombs – no reason for the market to plummet.
Was Trump’s decision predictable? Fundamentally, no.
You could argue that the presence of a US carrier strike group in the Gulf meant something was up. But look at the pivotal point on the chart. If a deal had been struck before 28 February, equities would have probably continued upwards.
As it was, it was fastest fingers first on the ‘sell’ button when the market opened on 2 March.
Nobody knew which way the war-cookie was going to crumble beforehand. Apart from a lucky few who took some – ahem – ballsy flutters on the prediction markets, of course.
How did bonds do?
I’m so glad you asked! Here’s the year-to-date performance of the Slow & Steady portfolio’s much-vaunted defensive partnership:
Linkers = World index-linked government bonds hedged to GBP. Gilts = Nominal UK government bonds (All Stocks).
Nominal government bonds do not love an inflationary supply shock – as we saw in 2022.
Hence they’re down again, and standing by for a slump more to their liking. (Think something more along the lines of the Dotcom Bust or the Global Financial Crisis, where demand and liquidity dry up.)
More pleasantly, our index-linked bond fund looks reasonably solid.
It’s a short-term bond fund for one thing, which makes it inherently less volatile than a longer duration gilts tracker. Plus, it’s chock full of inflation-linked bonds. So you’d hope it would perform tolerably well when the consumer price index ticks up.
That said, the very same fund did not cover itself in glory in 2022. Read our individual index-linked gilt vs linker fund comparison for the gory details.
Though it took a while to reveal itself, our passive portfolio’s greatest weakness has proved to be its lack of defensive diversification. If I was starting again now, our model portfolio would include cash, gold, and commodities too.
Commodities are the one asset that is positively thriving right now.
Portfolio raw numbers time
What? You think I’ve been stalling? Well, maybe I have… Here’s the latest scores-on-the-doors, brought to you in CrisisWhatCrisis-o-vision:
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 portfolio’s overall annualised return since inception is 7.36%. Subtract average inflation over the period and the real return is about 4.5%.
That will do nicely. The average annualised real return for a 60/40 World/gilts portfolio is 4% since 1900. 1
The story over the portfolio’s lifetime has essentially been equity returns good, bond returns bad.
Grinding out a result
It’s easy to lose sight of, but the Slow & Steady has grown from £3,000 to over £100,000 in 15 years.
That figure places the model portfolio well above the average £80,000 held in pension wealth by people in my age bracket, according to this 2025 analysis of ONS data.
What’s more, this six-figure sum was achieved with relatively modest monthly contributions (£250 a month in 2010 money) and zero pension tax relief, too. (The portfolio is assumed to be held in an ISA.)
No fancy funds or strategies were used. No leverage or market timing. No kung-fu or specialist knowledge required.
All anyone had to do was follow the rules of a straightforward passive investing strategy and keep the faith long enough for it to pay off. (That’s the hard bit.)
It works and there’s no need to over-think it.
The long-term picture
The next chart shows the portfolio’s growth trajectory, along with the various setbacks along the way:
That is one boring chart. It looks like nothing happened. The portfolio has gently wafted up, and world events failed to knock it down again for any period longer than nine months. We shrugged off the drip-feed of fear.
That said, our model portfolio is still down from its December 2021 peak in real terms (See the lighter green line). That only goes to show how pernicious inflation can be.
Fund / asset class returns
Here’s a breakdown of the portfolio’s individual fund performance, with an eye to the short and long-ish runs:
| Fund | YTD (%) | 1yr (%) | 10yr (%) |
|---|---|---|---|
| Emerging markets | 5.7 | 34.5 | 9.1 |
| Real estate | 5.3 | 14.5 | 3.9 |
| World ex-UK | 1.8 | 28.8 | 13.4 |
| UK equities | 7.5 | 36.8 | 9.1 |
| World Small cap | 7 | 37.4 | 10.6 |
| UK gov bonds | -1.2 | 3 | -1.2 |
| Inflation-linked bonds | 1.7 | 5.6 | 2.4 |
Data from Morningstar. Nominal total returns (GBP). 10-year figure is annualised.
The short-term view tells us that equity diversification is back in vogue. Emerging markets and UK equities beat the MSCI World – and even the S&P 500 – over the last 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 smashed all-comers for years?
Stop performance chasing, people!
Okay, that’s enough tilting at windmills for one update.
New transactions
Every quarter we throw £1,360 of red meat to the wild dogs of the market. 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 0.19%
Fund identifier: GB00B84DY642
New purchase: £108.80
Buy 42.2377 units @ £2.58
Global property
iShares Environment & Low Carbon Tilt Real Estate Index Fund – OCF 0.17%
Fund identifier: GB00B5BFJG71
New purchase: £68
Buy 27.2076 units @ £2.50
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 0.6141 units @ £819.40
UK equity
Vanguard FTSE UK All-Share Index Trust – OCF 0.06%
Fund identifier: GB00B3X7QG63
New purchase: £68
Buy 0.1848 units @ £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 @ £534.69
UK gilts
Vanguard UK Government Bond Index – OCF 0.12%
Fund identifier: IE00B1S75374
New purchase: £285.60
Buy 2.1073 units @ £135.53
Royal London Short Duration Global Index-Linked Fund – OCF 0.27%
Fund identifier: GB00BD050F05
New purchase: £258.40
Buy 234.2702 units @ £1.103
New investment contribution = £1,360
Trading cost = £0
Average portfolio OCF = 0.17%
User manual
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Take it steady,
The Accumulator
- Jan 1900 to Dec 2025 real total returns in GBP.[↩]
@TA:
Nice update.
Re: “That said, our model portfolio is still down from its December 2021 peak in real terms (See the lighter green line). That only goes to show how pernicious inflation can be.”
Agree re inflation.
As it is a log graph, could you please indicate the deficit, e.g. 10% ?
Thanks.
My broadly equivalent proxy (with no new money going in) peaked mid-2018 and I am still behind (in reals) too if I back out the heavy lifting done over the last three or so years by my DB pension. As of last month, my gap to peak (in real terms using CPIH) in the no DB payments scenario was about 10%. Include the DB payments, and I was about 4% up versus mid-2018 value, but in fact this Pot peaked at the start of 2026.
Perhaps when matters with these two rogue states ie Russia and Iran are finally settled the stockmarket will continue its usual constant overall rise?
It does seem that at this moment the stockmarket feels that financial facts are going in the right direction as my “buy and hold “ global index equity and bond trackers appear to be performing more than adequately
Second guessing the direction of the stockmarket remains a very difficult if not impossible achievement for the ordinary investor
xxd09
Thanks TA. Always love these updates. This question isn’t intended to be snarky, but is there a reason you haven’t diversified further with cash, gold, and commodities? Surely it’s never too late?
I know I might be answering my own question but do you have another model portfolio that IS more diversified?
It would be a great way to compare different portfolio approaches in future years. Backdating would be a bonus.
@ColinT – Cheers!
I have modelled a portfolio with gold, commodities and individual index-linked gilts here:
https://monevator.com/decumulation-strategy-year-3-withdrawal-from-the-no-cat-food-portfolio-members/
This comparison includes cash:
https://monevator.com/what-derisking-your-portfolio-looks-like-members/
Those are behind the paywall but this next cople aren’t and cover the same thinking:
https://monevator.com/defensive-asset-allocation/
https://monevator.com/asset-allocation-for-all-weathers/
There is a reason I haven’t changed the Slow & Steady portfolio, though.
It was always meant to be simple and to model the basic principles of passive investing for a new starter. Albeit, it’s not as simple as just documenting a Vanguard LifeStrategy fund once a quarter (LifeStrategy funds didn’t even exist in the UK when we started the Slow & Steady.)
I handled the complexity problem with the No Cat Food portfolio by reducing the number of equity funds and diversifying the defensives instead.
But adding gold and commodities to a new starters’ portfolio isn’t a no-brainer. You can argue they’re not necessary. Just invest the bulk of your contribs in equities, hold some dry powder in cash / bonds, and rely on equities to beat inflation over time.
Moreover, gold and commodities are massively volatile. Gold’s track record looks brilliant at the moment but the day will come when it seems as toxic as bonds do now.
So there are arguments to just stay the course.
TI and I have been talking about a reboot. Starting a new live model portfolio from scratch and leaving the Slow & Steady to cruise home – it’s got less than five years of its original 20 year mission to go.
I like the idea of modelling a few different portfolios. Maybe a super-diversified portfolio along the lines that you suggest. Plus a straight 60/40 and a couple of other interesting variants.
Sorry, that’s such a long answer but we’ve been thinking along the same lines 🙂
This post backtests 8 portfolios 1970-2025:
https://monevator.com/what-derisking-your-portfolio-looks-like-members/
@Al Cam – Just checked, the portfolio is approx 7% down vs its peak in real terms.
In terms of my personal portfolio, I try not to think too much about previous peaks. It’s inevitable to some degree but I remember @ZX warning that the markets were overheating in 2021. His point (as I understood it) was that the gains were basically a distortion and would be taken back. How right he was!
I declared FI on the basis of my numbers at the time. Best thing I ever did. Inflation be damned 😉
Agree that incorporating inflation is no fun at all. What I did recently was calculate the geometric mean of my annualised, unitised returns (as far back as I have the data) and then the same for CPIH for same time period. As long as first number bigger than the second then count the win. I concur that worrying about real term peaks is a step too far in the depressing stakes?
@TA:
Thanks for the additional info.
The real ratio of where you are now vs where you were when you declared FI is another interesting stat. As it happens, – even in my no DB scenario – I am up some 9 plus years down the line. FWIW, I would not have believed that outcome to be possible way back when, and was anticipating some pretty substantial real decline by now. That it has not happened is down to several factors, and not just good returns – but so be it.
@Al Cam
Presumably, your with-DB scenario is with the DB payments added to the portfolio at 16 or 20 times the payments (post-tax?), in order to achieve a capital sum which you can then unitise or otherwise compare?
@Curlew,
No, my no DB scenario is just the Pot minus after tax payments received which includes a small PCLS. Prior to starting my DB we were largely living from the portfolio.
Great update – i have been following since the start! I am 36 and the performance of this 60/40 portfolio reminds me again why I completely jettisoned by bond exposure soon after starting my investing journey 8 years ago (no offence). I have no need for income as i am still accumulating and if I want genuine down-side protection (or dry power) I save cash (or very short-term cash equivalents). If I’m honest, I cant ever imagine a day when i would buy a 10yr government bond; 4-5% yield is nowhere near enough for me to take that sort of duration risk. I’m a big believer in the bar-bell portfolio (90% equity and 10% ‘cash and courage’) – what am i missing?
Hi Dave – very heartening to hear that these updates make some kind of difference – even if it’s showing you what not to do 😉
You may not be missing anything, so long as you’re happy taking whatever the market throws at you in a 90/10 portfolio.
I’d sound two notes of caution.
The first is that you haven’t been tested by the market these past eight years. Not really. Equity returns have been great and reversals short-lived. Diversification hasn’t paid off over this period.
If you haven’t already then it may be worth steeping yourself in some stock market horrible history for a sense of how bad things can get. (Maybe not necessary, I get the feeling you’re highly informed already.)
My second heads-up is that your feelings may change as you age, you have more at stake in the market, and less time to recover when things go wrong.
I wrote a piece about this recently:
https://monevator.com/is-100-equities-worth-the-risk/
It’s about what happened the last time the stock market dropped 50% and then stayed down for over a decade.
A long-time Monevator commentator mentioned that her attitude to risk had changed over time, and that she’d become more cautious of late:
“Some things need to be experience to be fully understood and can’t really be taught. I feel like risk tolerance falls into this category, particularly how this can change over quite a short period of time.”
I’ll briefly quote my response to @Rosario because it may be helpful to you, if not now then a future you 🙂
“I went through a similar experience to you. I was fine with 100% equities until I wasn’t. I didn’t care about market turbulence until the Christmas 2018 downturn. It was only a correction but somehow I’d crossed a threshold. Suddenly there was a lot at stake and that wobble made me sweat. Started derisking after that.”
Dave, you may be made of sterner stuff than I was, or there could be some crucial difference in our financial circumstances that means you can always shrug off the turbulence. But if you start to feel uneasy rather than excited when the market heads into bear territory, you’ll know something has changed.
Here’s some bits:
https://monevator.com/bear-market-recovery/
https://monevator.com/the-uks-worst-stock-market-crash-1972-1974/
https://monevator.com/japanese-stock-market-crash/
@Curlew (#8):
Thinking a bit more about your Q, I thought it worthwhile pointing out that my Pot does not include any [capitalized] values for DB, SP, or property. My net worth does include these and others. Just my take though.
@TA
Interesting update as usual & did get me rereading the commodities article even as i am trending towards the cheap 60/40 funds and less tinkering on my part.
As you mention you don’t want to change the portfolio too much (and agree as it would ruin the test) and you may have already answered in someway and i missed it.But was wondering if starting now and keeping the same assets & percentages split rather then adding Gold & cash/MM etc are there funds you would change as others have come to the market over the years. I.e would you have swapped the property or any of the equity index funds for others or is much of a muchness – or even from the same fund house say swapped the RL short duration IL for something like the RL short term fixed income on the bonds side?
@TA and Dave #11 similar to me, im a little older than Dave and have been 100% for about 8 years (since i discovered Monevator and various other resources) but started to get twitchey with trump 2.0 and a rapidly approaching big birthday so decided at Christmas 25 perhaps i didnt need to carry 100% and have gone down to about 80/20. I know i’ll be happier with this if a temporary dip comes but i do wonder if i will be happy watching the market grind up over time (which i expect it will over the longer term)
@Dave:10
>what am i missing?
I suspect a mixture of age and having “enough”. Once you are older, and have “won”, staying “won” regardless of what the world throws at you has a certain appeal, especially when you don’t have the years left to earn your way out of a downturn.
I was far more gung-ho about asset allocation 5 years ago than I am now.
@Grouty – Heh, that’s interesting. I do have the occasional twinge about it but not often. I try not to beat myself up for decisions that were correct given all the information I had at the time. Obvs it’s human nature to think, “If only”, but then again, the market could tank tomorrow.
@KLJ – One of the restrictions upon the portfolio back in the day was that ETF dealing costs meant a newbie investor was better off sticking to funds. Whereas now that distinction doesn’t matter.
Even so, it would make a marginal difference in most cases to switch to a slightly cheaper fund.
Sometimes the difference is worth while. I’ve just compared every vanilla Emerging Markets ETF available when I started the Slow & Steady.
There’s a 0.25% to 0.5% annualised return gap between the best and the rest over 16 years. Funnily enough, the best one is cheaper than the rest (don’t know if this was the case historically).
But I also don’t know how I’d have identified it ahead of time. It doesn’t have the most assets under management so there isn’t a wisdom of the crowds effect to free-ride upon.
(I’ve stuck to ETFs for that comparison because justETF make it so easy to compare.)
I’m happy the RL linker fund was the best one I could buy at the time. It was still a nose ahead of the equivalent linker ETF that came along later (last time I checked). And it’s well ahead of its short-term nominal bond counterparts.
However, I’m very tempted to switch out the small caps fund for a small value product. Vanguard have never cut the OCF of that fund, small value ETFs have come on stream in the 18-months or so, and the small cap premium looks scanty.
@TA
Thanks for the thoughts (had missed the reason for funds v etfs at the start of the project) and like you say with hindsight you would still not change much.
Rhino (#6):
Re “incorporating inflation is no fun at all.”
But, I trust you would agree a necessary evil which from time to time also throws up some seemingly curious results, especially if you examine month-to-month deltas. Examples include: increasing a nominal [monthly] gain, turning a nominal loss into a real gain, pretty much wiping out nominal gains, and turning nominal gains into a real loss.
I absolutely agree AC. It’s the correct yard stick for sure. Just a bit deflating (that’s a poor choice of words in the context, but I mean in the psychological sense).
So you incorporate monthly inflation figures? Maybe you see your first two examples on a monthly basis, pretty rare on an annual basis though? Not sure I’ve ever seen either of those two over that timeframe? Would be very sweet if I did though. Last two examples are all too horribly familiar..
@Rhino,
“Odd” behaviours are much more prevalent on a month-to-month basis because occasionally the running index goes backwards. For example, CPIH in Dec ’25 was 139.9, but in Jan ’26 it was 139.4, which was enough to turn my small nominal loss in Jan ’26 (vs Dec ’25) into a real gain! By Feb’26 CPIH was at 140.0.
Not seen that oddity on an annual [CPIH] basis – but not sure I have ever looked for it. Having said that periods of negative inflation do exist in the RPI historical records.
I made a comment on your “How much interest do you earn on one million pounds?”
And that was 15 years ago!! I was 28, and now I’m 43. Wow. Scary.
Compound interest seemed scary back then. Like… would I live to get it. It still kind of feels scary now. 65 feels a long way off.
I hope your site is still going then so I can come back and wish for a 2nd time I’d had listened about compound interest. All the best.
All the best, Samn. I hope things are going well for you and you’re compounding more interest at 43 than you were at 28 🙂
I have followed the progress of Slow and Steady for more than a decade and let’s just say my Sipp bears more than a passing resemblance to it
Please would you consider writing an article on how you could best design a portfolio for all seasons in today’s world. The changes to the ETF landscape, the poor correlation of Bonds, the role of AI etc may excerpt an influence on this new model portfolio…
In terms of my Sipp I am weighing up the increased risk factor of reducing long term Bonds and adding in a broad commodities Investment Trust like BRWM whilst also upping gold.
@Bellabeck – For sure. In a sense, that’s what I’ve been trying to do for some years now – but in a very haphazard way 🙂
I’ve included some links below that may help.
https://monevator.com/defensive-asset-allocation/
https://monevator.com/fixing-my-portfolio/
https://monevator.com/what-derisking-your-portfolio-looks-like-members/
https://monevator.com/investment-portfolio-examples/