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The Slow and Steady passive portfolio update: Q4 2021

Periodically, I’ll get a stock market-related communication from my co-blogger The Investor that sounds like he’s in the midst of a depth charge scene from Das Boot.

It’ll go something like this:

“Schnell! Schnell!” I’ll hear down the Monevator speaking tubes.

Or perhaps it could be: “Sell! Sell!”

“We’re going down!”

“Financial Independence under attack!”

I imagine The Investor in his control room, bathed in emergency light red. Market sonar pinging, portfolio pressure gauge spinning, shares getting crushed. 

Valiantly The Investor tries to contain the hull breaches, as volatility rocks his boat and reality floods in.  

Das Boot on the other foot

Me? I take it all as my cue to “Dive! Dive! Dive!” my psychological Nautilus.

Iron-clad against stock market news and cruising fathoms below the turmoil, there is comfort in the darkness. 

The occasional morsel of information floats down from above. A rotting carcass picked up by my searchlights – already too stale to divert me from my course.

When at last I do surface – days or weeks later – the market seas are generally calm. 

And so it is today, as I inspect the Slow & Steady portfolio nets after the recent alarm… while The Investor hangs his sodden undies out to dry on the deck.

Sorry. That’s an image you can’t quite unsee.

Net gains

Despite a winter battering by Omicron waves – with The Investor’s growth stocks apparently being hit by a shrinking gun – our Slow & Steady portfolio is up over 4% on the quarter and a remarkable 10% for the year. 

That’s on top of last year’s 14% gain.

And it builds on 2019’s 16%. 

I keep pinching myself, but I’m not dreaming. 

The Slow & Steady portfolio is Monevator’s model passive investing portfolio. It was set up at the start of 2011 with £3,000. An extra £1,055 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 tucked away in the Monevator vaults.

So which of our passive lobster pots landed the biggest catch this time?

The annualised return of the portfolio is 9.79%.
  • Global Property: up 28.3% in 2021 and 9.3% annualised over the seven years we’ve been invested in this asset class.
  • Developed World ex-UK: up 22.3% in 2021 and 15% annualised over the 11-year lifespan of the portfolio. 
  • UK FTSE All-Share: up 18.3% in 2021 and 7.4% over 11 years.
  • Global Small Cap: up 16.7% in 2021 and 13.8% over seven years.
  • Inflation-Linked Bonds: up 4.7% in 2021 and 16.3% over seven years.1
  • Emerging Markets: up 0.36% in 2021 and 7.8% over 11 years.
  • UK Government Bonds: -5.6% in 2021 but up 0.2% over the 11 years.

Note: these are nominal gains. Subtract inflation for the real return. 

Steaming ahead

The 28% annual gain from global property in 2021 versus near-zero from Emerging Markets reminds us again of the importance of diversifying our equities. 

It was impossible to know when we started this portfolio in 2011 that we could have just invested the lot in the S&P 500 and left it at that. 

In an alternate universe US equities might have spent the last decade turning in the sort of deeply average returns we’ve had from the FTSE All-Share. 

Indeed we may yet enter that alternate universe if the current valuation levels of the S&P 500 (levels last seen en route to the dotcom bust) fulfill the latest prophecies of poor expected returns to come from US large caps. 

If so, it’s plausible that our US-heavy Developed World fund will then trail in the wake of our other equity holdings in the decade to come. 

Or maybe the entire equity asset class will take a pounding and we’ll be left clinging to bonds like a buoyancy aid?

Nobody can ever perfectly see the future through the gloom.

Steady as she goes

For that reason I’m very happy to now rebalance away from our Developed World fund; it has drifted away from its 37% asset allocation anchorage to comprise over 41% of the portfolio.

Our rules dictate we’ll take some of those profits and invest them back into bonds – the ‘buy low’ asset class after a very poor year. 

There’s some light rebalancing to be done with the other equity funds, too. Their proceeds will help pump emerging markets back up to its 8% target allocation. 

We’ll also increase our inflation-linked bond allocation by 2%, at the expense of gilts.

We do this because we’re gradually shifting the portfolio’s defensive assets to a 50:50 split. We hold index-linked bonds for inflation protection and conventional UK gilts for recession resistance. 

Finally, with our annual rebalance and asset allocation review complete, it’s time to calculate the increase in our investment contributions in line with inflation.

Inflation adjustments

RPI inflation was a shocking 7.1% this year according to the Office for National Statistics. (The CPIH rate was 4.6%). We increase our contribution by RPI every year to maintain our purchasing power.

It means we’ll invest £1,055 per quarter in 2022. That’s up from £985 in 2021 and just £750 back in 2011.

New transactions

Our contribution is split between seven funds, as per our predetermined asset allocation. As discussed above, we also rebalance every year.

These are our trades:

UK equity

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

Fund identifier: GB00B3X7QG63

Rebalancing sale: £196.79

Sell 0.843 units @ £233.56

Target allocation: 5%

Developed world ex-UK equities

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

Fund identifier: GB00B59G4Q73

Rebalancing sale: £2,536.24

Sell 4.626 units @ £548.30

Target allocation: 37%

Global small cap equities

Vanguard Global Small-Cap Index Fund – OCF 0.29%

Fund identifier: IE00B3X1NT05

Rebalancing sale: £154.30

Sell 0.378 units @ £407.67

Target allocation: 5%

Emerging market equities

iShares Emerging Markets Equity Index Fund D – OCF 0.19%

Fund identifier: GB00B84DY642

New purchase: £585.92

Buy 304.061 units @ £1.93

Target allocation: 8%

Global property

iShares Global Property Securities Equity Index Fund D – OCF 0.17%

Fund identifier: GB00B5BFJG71

Rebalancing sale: £534.90

Sell 203.615 units @ £2.63

Target allocation: 5%

UK gilts

Vanguard UK Government Bond Index – OCF 0.12%

Fund identifier: IE00B1S75374

New purchase: £1,928.10

Buy 10.616 units @ £181.62

Target allocation: 29%

Global inflation-linked bonds

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

Fund identifier: GB00BD050F05

New purchase: £1,963.20

Buy 1731.214 units @ £1.13

Plus reinvested dividends: £87.83

Target allocation: 11%

New investment = £1,055

Trading cost = £0

Platform fee = 0.35% per annum.

This model portfolio is notionally held with Fidelity. Take a look at our online broker table for cheaper platform options if you use a different mix of funds. Consider a flat-fee broker if your ISA portfolio is worth substantially more than £25,000.

Average portfolio OCF = 0.16%

If all this seems too much like hard work then you can buy a diversified portfolio using an all-in-one fund such as Vanguard’s LifeStrategy series.

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

Take it steady,

The Accumulator

  1. Much of that gain stems from when we were invested in longer-dated UK index-linked bonds until April 2019. []
{ 58 comments… add one }
  • 1 JimJim January 5, 2022, 9:39 am

    Happy new year all,
    @TA good, and comforting, to see the ‘slow n Steady’ doing exactly what it says on the tin yet again. I am pleased to say that this year my portfolio matched it, and my volatility was lower than many of the previous years. By that yardstick I must be getting nearer the right balance for de-accumulation. I am just hoping for calm seas this year but, as always, we get what we get and hopefully we are prepared.
    … Hanging your smalls on the deck of a submarine seems an awfully short sighted thing to do – I am fortunate in that I can’t imagine @TI would do such a thing 🙂

  • 2 Devitalio January 5, 2022, 12:32 pm

    Hello, looks like origin story link gives 404 error. Can you please fix it. I’d like to read that one.

  • 3 The Accumulator January 5, 2022, 12:52 pm

    @ Devitalio – Sorry about that! It’s fixed now.

    @ JimJim – A Happy New Year to you! Agreed, a lack of imagination is a distinct advantage when it comes to TI’s personal habits.

  • 4 MrOptimistic January 5, 2022, 2:37 pm

    I imagine The Investor will exercise his right of reply to this calumny.

  • 5 Financial Samurai January 5, 2022, 3:09 pm

    HNY! And Go USA! It’s funny, but due to country bias, US stocks is what I focus on. Don’t have the bandwidth to focus elsewhere, except for the occasional Chinese internet stock that has imploded.

    I think US housing is going to be super strong in 2022.


  • 6 Devitalio January 5, 2022, 8:16 pm

    I got a question. Maybe there is already an article about it. Say you’re already retired and chasing cows. Your SWR is X% annum. But your portfolio is comprised of accumulation ETFs and Funds i.e. those that dont distribute dividents but rather reinvest them. How do you technically do your Safe Withdrawals? Like you calculate X% of your portfolio and then proportionally sell to keep allocation in place? What if ETF to sell is not round number? Some technical questions like this.

  • 7 Meany January 5, 2022, 9:18 pm

    Folks, the ongoing question is “what is the best defence for these times”?
    I hope we can look forward to more guidance and debate.
    Here’s my handy quick state of play summary for you:

    format: asset-class FUND-NAME total-return-2021%
    (from buy priced on 31dec20 to valuation on 31dec21)
    [min%,max% intrayear return through 2021]
    {total-return% 1feb2020-31dec2021 for the whole covid era}

    cash easy access ………………… MARCUS +0.5% [not volatile] {+1.42%}
    gov bond £ intermediate …….. VGOV -5.74% [-9.6%,+0.2%] {-0.74%}
    gov bond $ 7-10yr unhedged .. IBTM -1.31% [-7.6%,+0.5%] {+0.42%}
    agg bond global hedged ………. VAGP -1.82% [-3%,+0.2%] {+1.76%}
    agg bond uk biased ..Lifestrategy(bondpart)* -3.89% [blend obscures]{+1.7%}
    linkers global short …….. RoyalLondon +4.82% [+0.6%,+4.8%] {+8.51%}
    linkers £ long ….. Vanguard(B45Q903) +3.8% [-9.6%,+10.8%] {+10.43%}
    linkers $ hedged ……………….. ITPG +6.13% [-2.3%,+6.3%] {+14.43%}
    linkers $ unhedged ……………. ITPS +7.52% [-5.6%,+9.8%] {+11.44%}
    gold ………………………………… SGLN -2.82% [-12.3%,+3.2%] {+10.85%}

    (*) rough calc lifestrategy agg from Lifestrategy60return% =
    0.6*Lifestrategy100return% + 0.4*Lifestrategy(bondpart)%
    N.B. LS ought to be a superior way to hold your AGGony but the
    uk bias seems to taketh about as much as the daily blending giveth

    On S&S: it’s about matched “Lifestrategy70” in 2021, with 10% more
    defence. So S&S is “better”? The stocks were much better with property
    & ex-uk besting the LS bias. But the defence was abysmal and only rescued
    by linkers. LS is also weak for having (no/few?) linkers.

    Anyone going to follow this rebalance and sell 6% of your
    dev world stock to buy VGOV?

  • 8 The Investor January 5, 2022, 11:16 pm

    @Devitalio — Fair question. Perhaps our resident cow chaser (love it! 🙂 ) should do an article on this as he begins to grapple with the technicalities.

  • 9 Al Cam January 6, 2022, 9:51 am

    @Devitalio (#6) & @TI (#8)
    +1 to that

  • 10 Onedrew January 6, 2022, 10:56 am

    @Devitalio: As we have pension income to cover the basics, I use what I hope is a super-safe method for additional income by only taking profits above RPI (Retail Price Index, which updates monthly). If we don’t need to take cash out for now I park it in GPB-hedged short-term inflation protected US treasuries using TI5G. I use TI5G because I cannot find a UK government equivalent – perhaps because few such gilts are issued to make an ETF work. So far it has performed better than a savings account and is tax sheltered until we take it out.
    If we have parked a useful surplus and there’s a correction in the S&P 500 we might sell some TI5G and buy XDPG, but usually our small slug of un£hedged 20+ year treasuries (IBTL) takes the sting.

  • 11 Wonky January 6, 2022, 11:24 am

    When looking at index linked UK government bond funds does the YTM, currently around – 2.8% include the current RPI or is that added on at the time of the coupon payment?

  • 12 The Accumulator January 6, 2022, 4:20 pm

    @Devitalio – yes, exactly that.

    Say you make an annual withdrawal to cover your spending for the year ahead.

    Sell enough units / shares at beginning of the year to cover your income needs for the next 12 months.

    Calculate your sales so that your portfolio is rebalanced at the same time.

    Note, that depending on your withdrawal strategy, you’re likely to withdraw a set income in pounds rather than a percentage of your portfolio. That’s how a sustainable withdrawal rate strategy works after the first year.

    This piece sketches out (and links to) some more advanced withdrawal rate strategies.

    @ Meany – these pieces might help:



    If the S&P 500 crashes this year then this rebalancing move will look genius 😉

  • 13 Al Cam January 6, 2022, 4:57 pm

    @TA (#12)
    I was wondering if you were going to go into the nitty-gritty of selling from a SIPP/Income Drawdown product. On the face of it, this should be very easy. However, in my experience, it is far from straightforward. To give you just a few issues: it is often very slow (so get started well before the end of the tax year), usually involves copious volumes of box-ticking paper-work, and the tax calculations are always interesting.

  • 14 Tom-Baker Dr Who January 6, 2022, 9:13 pm

    @TA (#12) – What’s your opinion about monthly withdrawals from a SIPP rather than year withdrawals as you mentioned? The upside being that you maximise your time in the market. The downside is that you will pay more transaction fees because you will be selling more often. I think there might be a delicate tradeoff between the benefits of being invested longer and selling fees.

    I vaguely remember ERN analysing this once and concluding that monthly withdrawals reduce SoR by a tiny bit.

    On the other hand, fees are deterministic, whilst any benefit from being in the market for longer will be stochastic and only materialise on average in the long run. I would be interested to know your thoughts on this.

  • 15 Haphazard January 6, 2022, 10:05 pm

    It’s really very difficult to know what to do if you are looking for something intermediate, just to preserve the existing value of your cash but without the inflation-induced erosion you’d get with a savings account. It would be so helpful to have more options for short-dated inflation linked bonds. We don’t even have a name for funds that you don’t need to put in a zero-volatility instant-access bank account, but can’t just kick into the long grass…The problem with funds like TI5G is that if you can’t hold it in a tax shelter, as an Irish-domiciled ETF it raises all sorts of tax complications.

  • 16 Onedrew January 6, 2022, 10:35 pm

    @haphazard: I hold in my ISA mainly Ireland-domiciled ETFs with UK reporting status traded on the London Stock Exchange, including TI5G. There’s no tax issue that I am aware of.

  • 17 Meany January 7, 2022, 8:16 am

    can I ask what % of the long unhedged $ bonds (IDTL) you hold
    to defend a what % S&P allocation? That sounds like a very sensible
    and potentially quite powerful way to minimize bond reliance!

    @TA (12)
    >these pieces might help:
    yes, thankyou very much.
    My complaint is that the “straight implementation” of the All Weather
    (=cash,VGOV,royallondon,SGLN) appears a bit of a self-cancelling
    mix – and a bit too likely to sink outside of crashes as per its
    -0.8% performance in 2021 (although it has beaten the Agg and
    smashed gilts since you described it in October!) – and in a crash
    the sinking linkers likely cancel the weakened VGOV rise which leaves
    the gold as the only real defence.
    Can All Weather be tuned up based on the near certainty that the £ will fall
    10% in a 20% market crash?
    Does bonds having more downside risk than upside potential make any
    defence a game of scaling down risk while capping portfolio upside?

  • 18 Onedrew January 7, 2022, 10:48 am

    @meany: I try to keep
    half my holdings USA-only and the same proportion hedged to the £, with an overall 70/30 Equities/Protection mix.

    The unhedged 50% breaks down as 25% VEVE, 10% VHYL, 10% VUSA, 5% IBTL.

    The hedged 50% breaks down as 25% GSPX, 15% cash, 10% TI5G

    The 50% US element comprises 25% GSPX, 10% VUSA, 10%TI5G, 5% IBTL.

    The 30% protection element is 15% cash, 10% TI5G, 5% IBTL

    I do dynamically rebalance when things get rough, as I did in March 2020. I stick to a seven step ladder of buying XDPG until I am 100% equities if the S&P 500 halves against the last high. I buy XDPG simply because it falls further than VUSA in a crash, because the £ falls when the S&P 500 falls. This also explains why the unhedged IBTL goes through the roof on these occasions. I also use a laddered approach to buy back IBTL when the dust settles. If you use Justetf.com’s screener to compare the performance of GSPX, VUSA and IBTL on the graph it may make sense. Why not hold more IBTL if it’s that useful? Well, I don’t entirely trust it to always deliver, and it would break my 50% hedged rule. IBTL delivers a ton of volatility so I feel I only need a little. I do like the neatness of 10% each in cash/TI5G/IBTL but I am trying to remain untempted for now.

    Same with the oversized US allocation. If one day VEVE outperforms VUSA, I may reconsider and make the entire equity holding developed world, but I’m not holding my breath.

    Sorry for my long reply but I felt a bald S&P 500/IBTL (not IDTL) answer would not be useful.

  • 19 The Accumulator January 7, 2022, 12:19 pm

    @ Haphazard – re: short-term inflation-linked bonds – GISG came on to the market six months or so ago – Lyxor Core Global Inflation-Linked 1-10Y Bond (DR) UCITS ETF – Monthly Hedged to GBP – Dist.

    Not sure what tax jurisdiction you’re in but I’m struggling to think of any tax disadvantage for an Irish ETF for a UK investor. Are you worried about loss of reporting fund status for holdings outside of tax shelters?

    @ Meany – The historical record shows how difficult it is to predict the shape of the next crisis and therefore what asset will best protect you.

    The all-weather approach rightly assumes we must be ready for anything.

    If the next crisis is inflationary then you’ll be glad of inflation-linked bonds as there’s a strong chance nothing else will work.

    If the next crisis is a recession, and long bonds prove to be the best antidote then – sure – any other asset will weaken your result somewhat.

    But this is just the defensive version of stock picking. If we know what will happen then we should choose the best asset to meet the moment.

    The problem is: we don’t know what will happen.

    Gold works in fits and starts, so I can’t ever think of that as likely to be my only real defence.

    This piece looks into which defensive assets worked when from a UK perspective:

    @ Al Cam – Sadly / happily – I can’t write about drawdown hassle factor because I’m still too young to tap into my SIPP 🙂 That’s interesting to know though. What’s your drawdown schedule and how early do you have to get the ball rolling for each payment?

    @ Tom-Baker Dr Who – I can imagine drawing down quarterly, six-monthly or annually but not monthly.

    Monthly would be too much hassle while anything beyond annual drawdown would mean holding too much cash.

    Within that continuum, I don’t think I’d sweat the marginal differences that various withdrawal timings *might* make.

    Even if ERN came up with a 0.1% SWR advantage for monthly withdrawals, I think I’d have to prioritise my peace of mind. Not to mention the chance that a noisy signal, a different path dependency, or the interaction of fees in my portfolio would render the result moot.

    You have got me thinking whether I’d consolidate my portfolio into a simpler range of funds though – to reduce trading fees and rebalancing complexity.

    What are your thoughts on this? Will you go for monthly withdrawals?

  • 20 Haphazard January 7, 2022, 12:30 pm

    To clarify, the tax issue with Irish-domiciled ETFs (outside a tax shelter) is a matter of complication, rather than the amount of tax. The faff of trying to look up excess reportable income and get all that right… it just seems to add a lot of complication.

  • 21 Onedrew January 7, 2022, 12:36 pm

    @haphazard: You’re absolutely right. Imagine the workings-out if there was an accumulation version.

  • 22 Al Cam January 7, 2022, 3:11 pm

    @TA (19):
    My bad – I had forgotten you should be [relatively] youthful to “chase cows”!
    I w/d from SIPP/ID once per year and set things off in January. To date this has assured completion within the tax year – but more often than not with interventions en-route. I am not alone in finding this torturous and have discussed it @monevator at least once before in the comments; I just cannot currently locate any relevant post. What I also remember from that chatter is that other reader(s) have set up monthly drawdown and once they got it up and running found it relatively painless.

  • 23 Al Cam January 7, 2022, 3:18 pm

    P.S. ERN work referenced by Tom Baker … is part 1 at: https://earlyretirementnow.com/2021/08/18/when-to-worry-when-to-wing-it-swr-series-part-47/
    and his pithy summary was: “wing it “

  • 24 Tom-Baker Dr Who January 7, 2022, 3:18 pm

    @TA (#19) – I’ve found that ERN post I mentioned (https://earlyretirementnow.com/2021/08/18/when-to-worry-when-to-wing-it-swr-series-part-47/) and re-read it. Indeed the difference between monthly and annual withdrawals is tiny: even when he conditions on a high CAPE, the safe withdrawal rate increases only by 8 basis points with monthly withdrawals. This can easily be made worse than the annual withdrawals SWR by future increases in trading fees or some other fee related to withdrawals.

    I think I would probably go for annual withdrawals or, if I can find any convincing evidence of upside, semi annual or quarterly. Perhaps if inflation gets too high, a higher withdrawal frequency will be better?

  • 25 far_wide January 7, 2022, 4:14 pm

    As it happens, I’ve just rebalanced away from global equities too.

    Well, sort of. I’ve sold a chunk, and have been somewhat stymied as to what do next. Monevator is a superb source of info, but can I just give a plug to another site that’s been very helpful on this matter (no affiliation). Occam investing has several UK focused deep-dive articles and has helped shape my thinking.

    To be honest, I’m still struggling to pull the trigger and buy bonds, and whilst inflation linked bonds sound great they of course only benefit you with *unexpected* inflation. This is very far from a given as hopefully supply constraints ease themselves globally and the negative yield handicap is a high bar.
    Do I have an answer? Not really. I’m either going to withdraw it into a tedious fixed rate cash saver, or perhaps go for VAGP (global aggregate hedged bonds).

    (Yes I do appreciate that all of the above is not the passive way. So be it!)

  • 26 Naeclue January 7, 2022, 6:45 pm

    We are not drawing from our SIPPs at present, but it can certainly be a bit of a faff if you want to optimise the tax.

    Mechanics of withdrawal are straightforward enough at Hargreaves Lansdown. Either set up a fixed monthly amount, or give notice as and when you want to on a month by month basis. If you opt for fixed monthly amounts (not something I ever did) and there is insufficient cash in the SIPP to make the payment, a lesser amount is paid out. Account balance – £50, but that £50 might be adjustable.

    For variable monthly withdrawals, just specify an amount by a certain date (HL provide a calendar) and that amount is paid out on the 28th, less tax. Not sure how UFPLS payments work as our SIPPs are fully crystallised, but probably something similar. Maybe a box tick to say the payment should be a UFPLS.

    Taxation makes SIPP withdrawals complicated in 2 main ways. The first is that the SIPP provider has to do a PAYE calculation for each withdrawal. If you draw out £10k in April, the assumption is you will be making £10k withdrawals per month and so you will be clobbered for tax. As I understand it, it is possible to claim tax overpayments back from HMRC before the end of the tax year, but I have never done this so am unsure as to how it is done and how much hassle it is.

    The second complication is with trying to manage your overall level of tax. If you have unpredictable sources of income, other than from the SIPP, then it is not possible to predict how much tax will be due until late in the tax year. That makes it difficult to do things like adjust SIPP withdrawals to keep within your basic rate limit, or indeed fully use up your personal allowance.

    For a while what I used to do was withdraw dividends and bond interest from the SIPPs as it arose, then once per year in January, when we rebalanced, try to estimate how much cash would be needed by the end of March in order to use up our basic rate limits. As part of rebalancing I would make sure that enough cash was made available to meet the estimated SIPP withdrawals. Gift Aid fed into this estimate as well, as you can gross those up by 1.25 to obtain a higher basic rate limit. I would then set up small withdrawals for January/February, followed by final, more significant withdrawals in March when most of the figures were known. All a bit hit and miss because we hold ETFs that pay at the end of March, but the precise payment is not known until after the cut-off date for the March SIPP withdrawals. However, the significant SIPP payment at the end of March mitigated problem 1 and the tax situation was all sorted out in self assessment.

  • 27 miner 2049er January 7, 2022, 8:35 pm

    well this is an eye opener, reading about withdrawing from SIPP and the tax implications, i silly assumed i’d be able to do a once maybe twice a year shot withdrawal of the tax free amounting to £12.7k once and year and not have to faff about with tax returns etc, **thank-you community** for the information (although i’m 7+2(thankyou HMG for the extra 2) years away from this, maybe there will be a better system sorted in that time….)

  • 28 Jura January 8, 2022, 8:54 am

    @far_wide re linkers: does that mean that the current inflation rate is baked into the price of linkers, if it were to increase from this point linkers would increase in value, but if it was to drop then they would lose? Struggling to understand if I should allocate a small amount of my bond holding or whether I have now missed the boat?

  • 29 AndyJ January 8, 2022, 9:36 am

    Happy new year all.
    “The occasional morsel of information floats down from above. A rotting carcass picked up by my searchlights – already too stale to divert me from my course”
    @TA – bravo! 🙂

    @naeclue – thanks for that withdrawal overview – really useful eye opener.

  • 30 Al Cam January 8, 2022, 11:27 am

    Please note @Naeclue’s tax summary (#26) assumes the SIPP/ID provider has an HMRC issued tax code for you for the current tax year. IIRC, if they do not have such a tax code for you then zero tax free allowance can be assumed.

  • 31 Al Cam January 8, 2022, 11:31 am

    @miner 2049er (#27):
    Re: “maybe there will be a better system sorted in that time….”
    Hopefully you will be correct – but my experience over the last few years has, if anything, gone in the opposite direction – ie got worse!

  • 32 The Accumulator January 8, 2022, 12:08 pm

    Great discussion all and thank you Naeclue for that generous explanation of how drawdown works with HL.

    @ Al Cam & Tom-Baker – it seems like we have circumstantial evidence that annual withdrawals are typically thrown into a poorly administered ‘ad hoc withdrawal’ bucket by the platform industry that requires error-prone manual processing. Whereas monthly withdrawals may be more painless because they sync with automated systems that dispense cash on cue.

    If that’s generally true and only monthly withdrawals are efficiently processed then that’d force me to choose between annual and monthly.

    With quarterly and six-monthly withdrawals being too painful to face if they’re generally subject to the hassle-athon Al Cam faces.

    That would make me think very hard about consolidating down to as few funds as possible.

    Would be interesting to know how variable the experience is across platforms. You’d expect Hargreaves Lansdown to be good, for example.

  • 33 Jonathan B January 8, 2022, 1:08 pm

    Naeclue – similar experience of HL here. In the hope of simplifying the tax implications, my wife retired from her job at the end of March intending to draw down £1040 per month, her tax threshold for the next tax year. However that couldn’t be done direct from her work DC pension, and getting it transferred over to HL took too long for the April 28th payday (we did try, with almost daily phone calls to both sides, but transfers always end up slow). Having missed that, we hoped that asking for the missing sum in March would let their computer calculate she was still inside the threshold – but no, tax was charged and only reimbursed several months later.

  • 34 Al Cam January 8, 2022, 4:47 pm

    Re #22 above:
    I have been doing a bit of digging and …..
    Related chatter (most recent first) is available from:
    Ref 1) #244 in:
    Ref 2) and from #24 in:

    The chatter at the link to another site from within Ref 2) above IMO provides some potentially useful additional details.

    Jonathan B’s comment at #33 above possibly supersedes some of his previous chatter at Ref 1).

  • 35 Maggie January 9, 2022, 3:47 am

    It’s encouraging to see the 10% increase in 2021. However, if the RPI is 7.1%, does that mean you only beat the inflation a bit? E.g. the return isn’t as good as it seems? Thanks

  • 36 The Accumulator January 9, 2022, 12:03 pm

    Hi Maggie – that’s correct. After RPI, the portfolio is 3% ahead. After CPI-H then the portfolio is up over 5% real terms – which is the historical average for 100% equities, so that’s a good result for a 60:40 portfolio.

    Obviously, things look a lot prettier if you compare against the negative return of cash in the bank.

    You could also benchmark the performance against your personal inflation rate:

  • 37 xxd09 January 10, 2022, 10:10 am

    Been in drawdown for many years (18) first with Alliance Trust and now with Interactive Investor
    Took the 25% tax free lump sum in more stable times
    Could this be a problem in more volatile times ie initiating process to actual cash transfer as portfolio value could go up and down during what could be a 10 day + process-altering the “25%”?
    I usually take one cash withdrawal after April 5th and then replenish my cash (for daily expenses ) account-I keep 2 years living expenses in cash
    This withdrawal also rebalances the portfolio as withdrawals come from the successful investments in the SIPP- be they equities or bonds or a bit of both
    Tax is reclaimed using a P55 form online after cash received with its tax deduction
    Usually tax repayment appears in a month but been up to 6 weeks
    That’s it -simple ,cheap and easy to follow

  • 38 JohnP January 22, 2022, 1:37 pm

    @TA I have a portfolio currently in a SIPP, which has a similar setup to your slow & steady, regarding how you calculate the Annualised Return, I read a few old articles on here which suggested to just track cash in and cash out using XIRR, however to exclude dividend as cash in, should the Tax Relief from a SIPP be treated like Divs or do you record it as a normal Cash In line, in this type of calculation

  • 39 The Accumulator January 23, 2022, 7:06 pm

    Hi JohnP – Tax relief is cash in for XIRR.

  • 40 JohnP January 25, 2022, 7:31 pm

    thanks for the info @TA

  • 41 MrBatch January 28, 2022, 1:04 pm

    @onedrew #18
    Lovely PF – so simple & powerful.

    Could you expand on your 7 step approach to attack if sp500 falls into 100% XDPG if I understood correctly, then you’re thinking to unwind back to your standard PF. Assume you attacked in Mar20 has / when did the PF revert fully to your balanced one?

    For ref I have just taken my 25% tax free from Sipp and am looking to lower risk reallign the remaining for decumulation ahead – I have been looking at Perm Portfolio & Golden Butterfly but yours looks very interesting as well.

    Best & thanks in advance

  • 42 Onedrew January 28, 2022, 1:30 pm

    @Mr Batch: The XDPG holding was sold on 3 August when it hit a new high. I buy as the market falls 4%, then 9%, then 15% etc with the final buy at 49% from the high. I figure that if bonds and cash are my insurance against the market falling then once it has actually fallen that proportion of my insurance money might as well buy cheap equities. It has worked well since that August 3 recovery and now on its third round of falls from new highs, with the S&P 500 down more than 9% today. I am not recommending anyone else does similar, and I do not rely on my investments for income although I am overjoyed with the performance since 2013.

  • 43 MrBatch January 29, 2022, 3:28 pm

    @onedrew : Thanks for the swift response.

    Do you use the same ladder steps 4, 5, 6, 7% etc to rebuy IBTL/Ti5G/ goto cash on s&p growth from the recent lowest point to daily higher figure? Any ordeerr you prefer IBTL vs TI5G vs cash

    I understand the VUSA v’s XDPG different falls based on £/$ but as you are already using GSPX which is hedged like XDPG wondered why you seem to use both and not just one or other ? ie the cheapest which on ii seems XPDG all the way.

    Re your point about future 100% VEVE over VEVE / VUSA split, at present with value stocks going strong an equal weighted s&p500 ie XDEW ($) or XDWE (£ – not hedged but no fx purchase charged ) looks promising.

    Again thanks in advance – what I find very attractive is not just your concise PF but the hedged/non hedged balance which is almost always overlooked. I possibly may add 7.5% Gold SGLN in protection by halving cash to give a more diverse protection slant.

    Look forward to input re Q’s above and of course understand this is discussion not financial advice.

    Top man,
    Mr Batch

  • 44 Onedrew January 29, 2022, 4:11 pm

    Yes, same ladder for IBTL, but smaller amounts building to a max 7% holding – which has never happened. I use the temporary XDPG holding for practical reasons, writing a Sell All limit order at a new high for the S&P 500 however much has been bought. I adjust the seven buy orders when the S&P 500 rises, which is the only real chore when the market performs as it has since the end of 2018.
    GSPX is a permanent holding. When the £ fell to $1.15 after the Brexit vote it seems prudent to bank part of the winnings in a £-hedged ETF, which I think was IGUS at the time. These days GSPX and XDPG are usefully cheaper.
    Gold is a complication too far for me and I am not certain the benefits of IBTL are long term but it has done the business so far. If I were starting fresh I would be tempted to just hold 35% each in VEVE and GSPX, and the remaining 30% in plain cash to buy XDPG on the dips, but the main thing is to have a Sell High Buy Low plan and try very hard not to fiddle.

  • 45 MrBatch January 29, 2022, 10:23 pm


    Wow – New VEVE/GSPX/cash plan is certainly easier as only ever buying / selling 1 thing – XDPG, and charges v low as often just hold 70% in VEVE/GSPX. But it does break you hedge/unhedge % to 65/35 🙂

    Can i ask when you buy on S&P500 drops do you use equal amounts of your 30% protection at each of the 7 dip buys ie 4.28% each one, or front / rear load proportions.ie small at 4% biggest at 49% or vice versa?

    Assume you base all drops against the All Time S&P500 high or last year highest figure or … ?

    Lastly trying to understand the thinking on unloading the XPDG that have been brought at any time with respective to the new proposed 3 ASSET PF. eg If sp500 is 100 then buy some XPDG at 96 (4% down) and maybe more if 9% down, 15% etc. Do you have a single sell limit on XPDG that sells the entire holding to cash at say 100 again or 101 reagrdless of how many XPDG you brought on the way down. This would be simple and reduce rolling ladders rebuy like you mentioned with IBTL currently, whereby you have to amend the 7 buy instructions as well as the sell instruction.

    Really enjoyed kicking this around this afternoon while it rained. -thank you for a refreshing approach from my point of view.

  • 46 Onedrew January 29, 2022, 10:55 pm

    I base the buy prices on the highest-ever closing price, a number that goes up frequently – hence rewriting the limit orders to accommodate. The first purchase is calculated to be enough to form 5% of the portfolio. I buy the same number of units thereafter. It means I spend more at the start but 4% drops are frequent and so far the cash portion has made more profit overall than any bond holdings whether VAGP, TI5G, VEVE, IBTM or IBTL.
    I feel I should reiterate that I am just telling my story which suits my circumstances with no time horizon.

  • 47 Onedrew January 30, 2022, 10:01 am

    Soz, MrBatch, in penultimate para for VEVE please substitute VGOV.

  • 48 MrBatch January 30, 2022, 10:29 am

    Thanks for the above. Understood a method that suits your circumstances and we are all different 🙂 Can see this is not a set and hold method, as constant review of SP500 ATH and hence resetting buy/sell limits. Also it could put you 100% equity at 49% drawdown which for some in a big crash may be uncomfortable.
    Your potential PF is interesting with no Bonds ( everyone seems to have a downer on any type of bond now except Inflation linked or Tips ) & just the 30% suggested cash holding being protective & dry powder. Some may see the inflationary worry of this cash, but there is no free lunch at the moment as all asset classes have inherent risks – hence your point I think of Do Your Own Research to meet your own needs.

  • 49 Onedrew January 30, 2022, 1:07 pm

    Last year it felt like the S&P500 hit new highs almost daily, so resetting the limit orders was a nice chore. Barcharts, investing.com and London Stock Exchange all have free email alerts to report new highs for XDPG so unless there’s an email from one of these or iWeb reporting that a trade has executed, there’s nothing to do.
    I guess a no-bond version with just cash, XDPG and VHVG would be even lazier, although there would be no dividends to top up after any cash left over has been used up at a 49% drop. I might add new money from savings if that should happen – if I haven’t spent it on diamonds and a Glock.

  • 50 MrBatch January 31, 2022, 11:03 am

    Ha Ha emergency measures …..!!! “if I haven’t spent it on diamonds and a Glock”

  • 51 MrBatch February 5, 2022, 5:51 pm

    Hi @onedrew

    Sorry to pick your brain again one final time. Very exciting and informative analysis week for me.

    Can you expand your process of the rebuy of IBTL having sold it high when s&p has dropped. I assumed you sell these first as they have grown, then Ti5g and cash should a fall ever hit 49%. I charted 2018 and Mar2020 and it does have nice volatility and negative correlation.

    I assume this rebuy happens only after the one off sale of all brought XDPE as s&p500 reaches a new ath? What triggers the ladder rebuy into the bond from the cash realised? S&p growimg to a new atm by %?

    I have done back testing this week of both models and SWR testing at portfolio charts. Both very interesting but difficult to gain full appreciation of effect of spending cash to buy equity on big drawdown.

    What i really like is the fact that action is taken on drawdowns, which help make them seem not as massive negatives but as a positive opportunity. Also the simplicity of approach which i feel would make management and appraisal so much easier.

    Hope you can just explain the IBTL rebuy process.

    Real thanks in advance.


  • 52 Onedrew February 5, 2022, 7:27 pm

    @MrBranch: I buy IBTL on the same price ladder as XDPG but in much smaller amounts, equivalent to 1% of total holding then same number of units for each of the seven rungs, currently holding equivalent to 5% and bottom rung 7%. These long duration bonds have served their purpose much better than VAGP or IBTM. ZXspectrum’s exposition on the benefits of even small quantities of long-term bonds has strengthened my view that they are a good thing, but I still have some trepidation and still consider I may eventually go equities/cash only. So far any sells have been due to ordinary rebalancing. I expect to Sell All IBTL when XDPG has fallen 15% and I need the money to set a Tradeplan to buy XDPG at 22% down. It may seem complicated but in practice it is very simple.

  • 53 MrBatch February 6, 2022, 11:19 pm

    @onedrew – Cheers Thanks. So the summary is once IBTL all sold to fund cheap equity purchase, no rebuy until XDPG reverts to All Time High and cash generated on its sale to slowly rebuy some IBTL which should be going down in theory. I am looking at amending to a 65/35 or even 60/40% to better suit my risk profile, but love the balance and ease of what you have described.

    I have read on this forum posts by zxspectrum on bonds – his knowledge & insight is clearly very strong and he presents a persuasive argument for bonds even though they are out of favor for many at present due to current negative yields and increasing interest rates to further push prices down.

    Thanks again for your time, input & openness.
    Happy investing !

  • 54 Dawn February 14, 2022, 5:54 pm

    Royal london global short term index linked bond fund
    Can anyone who holds this fund please advise me if they paid a dividend january 2021?
    I hold this fund on the I web platform and have held it since jan 2020
    no dividend was paid the following jan 2021, but then i recieved a dividened in to my isa account jan 2022. I hold distribution units
    I wrote to I web asking why no jan 2021 dividend and they said the fund didnt pay one then!
    I also have written to Royal London asking them but thye have not replied.
    If I web lost my jan 2021 dividend i think i will sell and rebuy accumulation units so it dosnt happen again… please advise, anyone
    Thanks in advance

  • 55 Onedrew February 14, 2022, 6:55 pm

    @Dawn: The iShares US short-term inflation-protected Treasuries ETF code TI5G declared a zero dividend in November. As the US is biggest bond market in the world, I wouldn’t be surprised that a global fund would have a similar result.

  • 56 Dawn February 14, 2022, 11:52 pm

    Thanks , that helps.

  • 57 MrBatch June 25, 2022, 10:43 am

    Thanks for all your input earlier in the year as above.
    I reconstructed my PF into simpler model as we discussed. I have been much more comforted in the YTD downturn knowing I had a simple plan to execute of buying % downticks at preset levels.
    My PF is far simpler to look at and whilst I have suffered like everyone else (I presume during these latest months) my unit price holdings costs have come down per fund/etf.
    If things carry on down I expect to be fully 100% equities at some stage. If things recover I will look at IBTL, IBTS and probably CG asset management dollar or real return funds (Hedged & Unhedged) to get some bond/IL tips as I rebalance out of all equity.
    Thanks again for your thoughts – they have been a real comfort 🙂
    PS> Hope you have stayed the course on your buying programme.


  • 58 Onedrew June 25, 2022, 1:01 pm

    @MrBatch: Yes, all is nicely on track, bought to level 4! If prices go back to those of 4 January, profit should be 8.5% up. I am certain that having a reasonable plan that you can confidently stick to is the most important feature, as today’s Monevator (25 June 2022) amply demonstrates. DNFS!

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