July 18, 2024
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Discover How This Passive Portfolio Crushed Q2 2024 – You Won’t Believe the Results!

Discover How This Passive Portfolio Crushed Q2 2024 – You Won’t Believe the Results!

Another quarter has passed, and the Slow & Steady portfolio continues its steady climb, albeit at a slower pace. The passive investing strategy has seen a modest 1% increase in the last three months, marking a total of three consecutive quarters of growth.

Let’s delve into the details with a dash of Right-o-vision™:

The Slow & Steady portfolio, Monevator’s model passive investing portfolio, was established in 2011 with an initial £3,000 investment. Every quarter, an additional £1,264 is added to the mix, diversifying across a range of index funds, with a tilt towards equities.

Last quarter saw some gains in:

Emerging markets: 5.4%
UK equity: 3.7%
Developed World, ex-UK: 2.5% (with the US leading, Europe lagging, and Japan weighing down the performance)

On the downside, global small cap and global property both dipped by almost 3%, while UK gilts saw a slight decrease of 1%.

Looking at the bigger picture, the Slow & Steady portfolio’s growth over the past year has been largely driven by the Developed World fund, with a considerable boost from the US market. While the US component soared by around 27%, other regions like the UK, Europe, Japan, and Emerging markets only managed about a 13% return.

Reflecting on the past decade, we are tempted to revisit our original asset choices and ponder over what could have been different. The returns from individual assets paint a diverse picture, with some outshining expectations and others falling short.

For instance:

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

The disparity in returns underscores the challenge of predicting market movements and the importance of diversification.

Hindsight often reveals missed opportunities, such as the exceptional performance of the tech sector or the underperformance of certain asset classes. While it’s tempting to dwell on past decisions, looking ahead with humility and a diversified investment approach remains key.

As we gear up for new transactions, our quarterly contribution of £1,264 is divided across our portfolio’s seven funds based on our predetermined asset allocation. This time, rebalancing using Larry Swedroe’s 5/25 rule wasn’t necessary, allowing us to execute the trades smoothly.

Highlights from our new transactions include:

UK equity: Vanguard FTSE UK All-Share Index Trust
Developed world ex-UK equities: Vanguard FTSE Developed World ex-UK Equity Index Fund
Global small cap equities: Vanguard Global Small-Cap Index Fund
Emerging market equities: iShares Emerging Markets Equity Index Fund D
Global property: iShares Environment & Low Carbon Tilt Real Estate Index Fund
UK gilts: Vanguard UK Government Bond Index
Global inflation-linked bonds: Royal London Short Duration Global Index-Linked Fund

The portfolio’s average OCF stands at 0.16%, reflecting its cost-efficient structure. For those seeking a simpler investment approach, diversified multi-asset funds like the Vanguard LifeStrategy series offer a convenient solution.

In the realm of investing, uncertainty reigns supreme. While past performance may hint at trends, the future remains unpredictable. Embracing diversity, maintaining a long-term perspective, and staying the course through market fluctuations are the pillars of successful investing.

Keep it steady,

The Accumulator

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