The Slow and Steady passive portfolio update: Q2 2024


It’s been a slow and steady quarter for the Slow & Steady portfolio. Our model passive investing loadout has risen just 1% over the last three months.

Still, we’ve now had three quarters of growth on the trot – and that has certainly put the colour back into our assets.


Here are the numbers, in Right-o-vision™:

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 £1,264 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 gainers:

  • Emerging markets: 5.4%
  • UK equity: 3.7%
  • Developed World, ex-UK: 2.5%. (The US led the charge, Europe barely stirred, and Japan was a dead weight)

Downers? Global small cap and global property both lost almost 3% each, while UK gilts slipped back 1%.

At least government bonds are up 4% on a one-year view. Their performance has been a horror show across the portfolio’s 13 years of existence though, thanks mostly to their 2022 rout.

America the beautiful

The recovery in the S&S over the past year has been decidedly lop-sided. It’s been driven mostly by our Developed World fund, where performance has leant heavily on a chunky US engine.


The US component is up around 27%. The UK, Europe, Japan, and Emerging markets have only returned about 13%.

Quite a gap – and enough to make you wish you had the gift of clairvoyance.

Don’t look back

Blame summer whimsy, but I’ve done something you should never do. I’ve gone back to the portfolio’s original members to check on their performance.

It’s a form of mental torture. Like any act of hindsight it invites you to imagine a parallel reality where you were an all-knowing genius who could divine the best course in advance.

Below are our starter funds’ cumulative nominal returns from January 2011 until now – absent all our rebalancing, drip-fed contributions, and the asset allocation changes we made along the way:

ETF data and charts from JustETF. Returns include dividends but not inflation.

Yee haw! Don’t mind me, I’m lying in the gutter staring at the stars (and stripes). La! La! La! America!

Bigger and better

Just how exceptional has America been? I find it easier to gauge performance using annualised returns:

  • US: 14.9%
  • Europe: 7.4%
  • Japan: 6.8%
  • UK 6.2%
  • Pacific ex Japan 5.3%
  • Emerging markets 3%
  • Gilts 1.5%

Remember: the average historical return for equities is 8% while government bonds have weighed in at 4%. (Those are nominal returns, before fund fees).

By this light every asset has been sub-par over the life of the Slow & Steady except the US. It alone has dragged the overall portfolio return up to a respectable level. Gilts and emerging markets have actually lost money, assuming average inflation of 3%.

Just think about how China has grown since 2011 – yet emerging markets have been terrible. Buying into the obvious growth story does not necessarily translate into shareholder profits.

Something to keep in mind if you’re tempted by an AI-focussed ETF today.

Crystal balls

Now let’s really twist the knife and revisit every asset class I might have plausibly chosen back in 2011:

I did consider a tech holding at the time. But it felt like the sector was already covered by the US – and later the World tracker. All true, and yet the 100% tech fund still delivered a thumping annualised return of 20%, compared to ‘just’ 14.8% for the US and 11.6% for the MSCI World.

Tech was another obvious growth story back in 2011. Everyone was hot for Facebook. But there were also lots of warnings that the sector was overvalued and outsized returns could prove hard to realise.

As things played out the warnings proved prescient for China, but not for tech.

Oh well. To be honest I wouldn’t have allocated more than an additional 5% to tech anyway, given its presence in the core US fund.

Key tech-away

Beyond the top three funds – all driven by Big Tech – everything else in the historical Could, Shoulda, Woulda rearview mirror was an also-ran.

Cash is the worst performer with an annualised return of 0.81%. That makes it a massive loser after 3% inflation.

Funnily enough, the 2.65% brought home by index-linked gilts means they’re doing a reasonable job of tracking long-term inflation – after negative yields and fund fees have taken a bite.

Linkers also tracked well ahead of gilts over this period.

Commodity returns were awful. Just 1.82% vs a nominal historical average of 7.5%.

Gold’s 5.4% annualised initially feels like nothing special but is actually spectacular in comparison to the other defensive asset classes on the menu.

Remember though, the point of defensive asset classes is less their long-term returns – though we still want those to be positive – and more what they do when equities sputter.

On the growth side, commercial property (5.6%) and the high-yielding Global Select Dividends were pretty ‘meh’ compared to a vanilla global tracker.

What does this prove?

If you went all-in on the Nasdaq over a decade ago and ditched this diversification nonsense then congratulations.

Did you just get lucky? On the equity side, there were good reasons in 2011 not to overweight the US – or even the tech sector. They were punts I certainly wasn’t qualified to make.

Lars Kroijer summed up the dilemma in his excellent post Why a total world equity index tracker is the only index fund you need, writing:

If you are overweight or underweight one country compared to its fraction of the world equity markets, then you are effectively saying that a dollar invested in the underweight country is less clever/informed than a dollar invested in the country that you allocate more to.

You would therefore be claiming to see an advantage from allocating differently from how the multi-trillion dollar international financial markets have allocated.

But you are not in a position to do that unless you have edge.

And we agreed we don’t have edge…

Everything I’ve learned about investing in the intervening years only confirms the wisdom of Lars’ words.

It’s fun to look back for hindsight wisdom sometimes.

But it’s more sensible to look forward with humility.

New transactions

Every quarter we throw £1,264 of fresh meat at the market wolves and hope they roll over and let us tickle their tums. Our stake/steak is split between our portfolio’s 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:

UK equity

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

Fund identifier: GB00B3X7QG63

New purchase: £63.20

Buy 0.232 units @ £272.59

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 0.705 units @ £663.53

Target allocation: 37%

Global small cap equities

Vanguard Global Small-Cap Index Fund – OCF 0.29%

Fund identifier: IE00B3X1NT05

New purchase: £63.20

Buy 0.152 units @ £416.84

Target allocation: 5%

Emerging market equities

iShares Emerging Markets Equity Index Fund D – OCF 0.19%

Fund identifier: GB00B84DY642

New purchase: £101.12

Buy 50.883 units @ £1.98

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 28.757 units @ £2.20

Target allocation: 5%

UK gilts

Vanguard UK Government Bond Index – OCF 0.12%

Fund identifier: IE00B1S75374

New purchase: £316

Buy 2.384 units @ £132.55

Target allocation: 25%

Global inflation-linked bonds

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

Fund identifier: GB00BD050F05

New purchase: £189.60

Buy 179.546 units @ £1.056

Dividends reinvested: £64.15 (Buy another 60.75 units)

Target allocation: 15%

New investment contribution = £1,264

Trading cost = £0

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

Average portfolio OCF = 0.16%

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

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

Learn more about why we think most people are best choosing passive vs active investing.

Take it steady,

The Accumulator

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