W<\/span>ell that\u2019ll do nicely. The Slow & Steady<\/em> enjoyed 9.5% growth over the past year. Not bad for a portfolio on auto-pilot. I think it\u2019s fair to say that reports of the death of the 60\/40 portfolio are greatly exaggerated.<\/p>\n Here are the latest numbers:<\/p>\n The Slow & Steady<\/em> is Monevator\u2019s<\/em> model passive investing<\/a> portfolio. It was set up at the start of 2011 with \u00a33,000. An extra \u00a31,310 is invested every quarter into a diversified set of index funds, tilted towards equities. You can read the origin story<\/a> and find all the previous passive portfolio posts<\/a> in the Monevator <\/em>vaults. Last quarter\u2019s instalment can be found here<\/a>.<\/p>\n With the exception of global property, our equity holdings had a spectacular year:<\/p>\n Source: Morningstar Portfolio Manager<\/a><\/p>\n The returns for Emerging Markets, Global Small Cap, and the UK\u2019s FTSE All-Share would look wonderful if they weren\u2019t put in the shade by the blowout performance of Developed World equities \u2013 specifically US equities.<\/p>\n Indeed the S&P 500 delivered nearly three times the return of its nearest Developed World compadre this past year:<\/p>\n Source: JustETF<\/a><\/p>\n And this isn\u2019t a new story. The US has been the Slow & Steady<\/em> portfolio\u2019s main engine<\/a> of growth over the course of its 14-year lifespan:<\/p>\n Charts like this can shake your faith in the power of diversification.<\/p>\n If this is a free lunch then it comes with a bad case of food envy.<\/p>\n Do you want some more of what the guy in the cowboy hat is having? Or are you (sensibly) wary of piling in near the top?<\/p>\n There are three options as I see it.<\/p>\n You could:<\/p>\n 1. Fold your non-US cards and project that the current trend will continue forever. Because that usually works out<\/a>, right? [Editor\u2019s note: Strong ironic tones detected.]<\/em><\/p>\n 2. Conclude the trend contains the seeds of its own demise, as hinted at by valuation measures. For instance, Research Affiliates\u2019 expected returns metric<\/a> forecasts a real US annualised return of just 0.04% for the next decade:<\/p>\n If this version of the universe comes to pass, then ditching your diversifiers now to go all-in on Team America would be precisely the wrong move.<\/p>\n 3. Finally, you could ignore both visions of the future, remembering that the US can indeed lag the rest of the world for years but also that the switchover point is inherently unpredictable<\/a>:<\/p>\n Data from JST Macrohistory<\/a>, The Big Bang<\/a>, MSCI<\/a> and Aswath Damodaran<\/a>. August 2024.<\/p>\n The longer-term view revealed by this chart shows that lengthy periods of dominance are quite common. <\/p>\n They do end \u2013 or at least they always have before \u2013 yet in the meantime the winners in those eras probably seemed \u2018locked-in\u2019 to many investors at the time, too.<\/p>\n The World index is now 72% occupied by US shares. If the S&P 500 continues to crush it, then World funds will pass that on, mildly diluted by the also-rans.<\/p>\n On the other hand if other locales do have a moment in the sun, then with a globally-diversified portfolio you\u2019ll at least have some exposure to those new sources of momentum.<\/p>\n Personally I\u2019m uncomfortable banking my net worth on any single sector, country, or asset class.<\/p>\n I\u2019m happy to take my time getting to where I\u2019m going, which is exactly why we called this project the Slow & Steady<\/em> portfolio and not the Get Rich Quick Or Die Trying Mega-Punt<\/em> portfolio.<\/p>\n Long story short: stand down, as you were.<\/p>\n I can scarcely believe it but the Slow & Steady<\/em> portfolio is now 14-years old.<\/p>\n Back in 2010, I gave it a 20-year time-horizon\u00a0\u2013 never thinking that was a destination this series would ever arrive at.<\/p>\n Now it looks like we might.<\/p>\n In the meantime, the original \u00a33,000 seed money has multiplied to nearly \u00a391,000 thanks to regular cash injections, reinvested dividends, and capital gains.<\/p>\n Here\u2019s the story in a chart:<\/p>\n The first half of the journey was almost a cakewalk, barring the launch year\u2019s knock back:<\/p>\n And the portfolio has only suffered one serious blow, in 2022. That year saw a bad-enough 13% loss in nominal terms \u2013 but a knuckle-gnawing 20% takedown after inflation.<\/p>\n Indeed, inflation went on to pour cold water over 2023\u2019s glowing 9.2% result too, leaving us with a tepid 1.8% return in real terms.<\/p>\n Inflation stayed becalmed for most of my adult life. Yet old hands \u2013 and books \u2013 had warned us for years that ballooning prices was the most fearsome enemy we might face as investors.<\/p>\n Well, now we\u2019ve lived it. Hence all the articles we\u2019ve published on various ways to defend against<\/a> galloping money rot.<\/p>\n Still, such setbacks have done little more so far than knock the froth off the portfolio\u2019s early promise.<\/p>\n Right now our annualised return is bang on average at 4.2%.<\/p>\n However the next six years will have an outsized impact on the portfolio\u2019s eventual fate due to sequence of returns risk<\/a>.<\/p>\n If this was not a model portfolio but rather our life savings \u2013 and if we couldn\u2019t afford to take a big loss from here on \u2013 then there\u2019d be a strong case for allocating more to wealth-preserving, short-term inflation-linked bonds<\/a> than we currently do.<\/p>\n We rebalance<\/a> every year so that our portfolio doesn\u2019t drift too far from our preset asset allocation. <\/p>\n Meanwhile our key equity\/bond split is fixed at 60\/40 for the remainder of the portfolio\u2019s lifetime. <\/p>\n As the Developed World performed spectacularly in 2024 and bonds handed us another year of defeat, rebalancing amounts to selling off around 4% of our primary equities fund to plough into cheaper bonds.<\/p>\n Perhaps we\u2019ll be rewarded for such saintliness in the next life \u2013 or maybe in the near future, if equities have a shocker in 2025.<\/p>\n Either way, remember rebalancing is about controlling your exposure to risk rather than juicing returns.<\/p>\n Our final move is to shift our 40% bond asset allocation by 2% per year until this sub-component is split 50\/50 between conventional gilts and short-term index-linked bonds.<\/p>\n Which means that this quarter:<\/p>\n The reason for this is we believe short-term index-linked bonds help defend the purchasing power of a portfolio once you\u2019re ready to spend it. <\/p>\n (See our No Cat Food decumulation portfolio<\/a> for more on our thinking.)<\/p>\n We increase our regular cash injections by RPI every year to maintain our inflation-adjusted contribution level.<\/p>\n This year\u2019s inflation figure is 3.6%, and so we\u2019ll invest \u00a31,310 per quarter in 2025.<\/p>\n That\u2019s an increase from \u00a3750 back in 2011. We\u2019ve upped the amount we put in by 75% over the past 14 years simply to keep our nose ahead of inflation.<\/p>\n Every quarter we\u2019ll drip-feed \u00a31,310 onto the stalagmites of our funds. This time our trades play out as follows:<\/p>\n UK equity<\/strong><\/p>\n Vanguard FTSE UK All-Share Index Trust \u2013 OCF<\/a> 0.06%<\/p>\n Fund identifier: GB00B3X7QG63<\/p>\n New purchase: \u00a372.87<\/p>\n Buy 0.262 units @ \u00a3277.74<\/p>\n Target allocation: 5%<\/p>\n Developed world ex-UK equities<\/strong><\/p>\n Vanguard FTSE Developed World ex-UK Equity Index Fund \u2013 OCF 0.14%<\/p>\n Fund identifier: GB00B59G4Q73<\/p>\n Rebalancing sale: \u00a33222.39<\/p>\n Sell 4.46 units @ \u00a3722.32<\/p>\n Target allocation: 37%<\/p>\n Global small cap equities<\/strong><\/p>\n Vanguard Global Small-Cap Index Fund \u2013 OCF 0.29%<\/p>\n Fund identifier: IE00B3X1NT05<\/p>\n Rebalancing sale: \u00a321.81<\/p>\n Sell 0.048 units @ \u00a3456.45<\/p>\n Target allocation: 5%<\/p>\n Emerging market equities<\/strong><\/p>\n iShares Emerging Markets Equity Index Fund D \u2013 OCF 0.19%<\/p>\n Fund identifier: GB00B84DY642<\/p>\n Rebalancing sale: \u00a3161.45<\/p>\n Sell 77.532 units @ \u00a32.08<\/p>\n Target allocation: 8%<\/p>\n Global property<\/strong><\/p>\n iShares Environment & Low Carbon Tilt Real Estate Index Fund \u2013 OCF 0.18%<\/p>\n Fund identifier: GB00B5BFJG71<\/p>\n New purchase: \u00a3403.84<\/p>\n Buy 171.789 units @ \u00a32.35<\/p>\n Target allocation: 5%<\/p>\n UK gilts<\/strong><\/p>\n Vanguard UK Government Bond Index \u2013 OCF 0.12%<\/p>\n Fund identifier: IE00B1S75374<\/p>\n New purchase: \u00a31434.45<\/p>\n Buy 10.985 units @ \u00a3130.58<\/p>\n Target allocation: 23%<\/p>\n Global inflation-linked bonds<\/strong><\/a><\/p>\n Royal London Short Duration Global Index-Linked Fund \u2013 OCF 0.27%<\/p>\n Fund identifier: GB00BD050F05<\/p>\n New purchase: \u00a32804.48<\/p>\n Buy 2653.248 units @ \u00a31.06<\/p>\n Dividends reinvested: \u00a3196.10 (Buy another 185.52 units)<\/p>\n Target allocation: 17%<\/p>\n New investment<\/strong> contribution<\/strong> = \u00a31,310<\/p>\n Trading cost <\/strong>= \u00a30<\/p>\n Average portfolio OCF <\/strong>= 0.16%<\/p>\n Take a look at our broker comparison<\/a> table for your best investment account options.<\/p>\n InvestEngine<\/a> is currently cheapest if you\u2019re happy to invest only in ETFs. Or learn more about choosing the cheapest stocks and shares ISA<\/a> for your situation.<\/p>\n If this seems too complicated, check out our best multi-asset fund<\/a> picks. These include all-in-one diversified portfolios such as the Vanguard LifeStrategy funds<\/a>.<\/p>\n Interested in monitoring your own portfolio or using the Slow & Steady<\/em> spreadsheet for yourself? Our piece on portfolio tracking<\/a> shows you how.<\/p>\n You might also enjoy a refresher on why we think most people are best choosing passive vs active investing<\/a>.<\/p>\n Take it steady,<\/p>\n The Accumulator<\/em><\/p>\n![\"\"](\"https:\/\/i0.wp.com\/monevator.com\/wp-content\/uploads\/2025\/01\/449-SS-Q4-Dec-2024-portfolio.png?ssl=1\")
<\/a><\/figure>\n<\/a><\/figure>\n<\/a><\/figure>\n<\/a><\/figure>\nWhere to go from here? <\/h2>\n
<\/a><\/figure>\n<\/a><\/figure>\nWorldly wisdom<\/h4>\n
Fourteen years down, six to go <\/h2>\n
<\/a><\/figure>\n<\/a><\/figure>\nLanding the plane<\/h4>\n
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Inflation adjustments<\/h2>\n
New transactions<\/h2>\n
User manual<\/h3>\n