The portfolio is up 11.18% on the year

After all the excitement of the first half of the year when the market was ‘hot, hot, hot’, the returns from our model portfolio have fizzled like an exhausted firework and fallen flat for the last three months.

We’re still up over 16% on initial purchase – and have made £1,681 since we began this investing adventure – but the previous quarter brought in all of £14.

The lack of drama tallies with the jittery recovery of economies that are still coming out of rehab. Progress comes in fits and starts, and is all too prone to relapse at the first sign of trouble. Like the cuffing of a shoplifter around the back of Primark, there’s nothing for passive investors to see here, and once we’ve added our new money as described below we can safely put our portfolio tracker away for another three months.

These days I only look at my own portfolio when I add new cash. And I’m all the better off for it.

The alternative is to sit there like a football club owner in the stands: emotionally rapt but powerless to influence the events playing out before you. An impulsive intervention is likely to have all the positive impact of Roman Abramovich substituting himself onto the pitch in search of a last-minute winner.

I digress. Here’s our model portfolio lowdown in spreadsheet-o-vision:

We're up £14 on last quarter!

The Slow and Steady portfolio is Monevator’s model passive investing portfolio. It was set up at the start of 2011 with £3,000 and an extra £750 is invested every quarter into a diversified set of index funds, heavily tilted towards equities. You can read the origin story and catch up on all the previous passive portfolio posts here.

One other piece of business to note is we’ve earned £12.90 in interest income from our Vanguard UK Government bond fund. We don’t even sniff it though as it’s automatically rolled back into our accumulation fund. Here it will build up like a fine layer of silt, adding a few extra grains to our strata of compound interest.

New transactions

Every quarter we push another £750 into the market slot machine. Our cash is divided between our seven funds according to our asset allocation.

We use Larry Swedroe’s 5/25 rule to trigger rebalancing moves, but all’s quiet on that front this quarter. So we’re just topping up with new money as follows:

UK equity

Vanguard FTSE U.K. Equity Index Fund – OCF 0.15% (Stamp duty 0.5%)
Fund identifier: GB00B59G4893

New purchase: £112.50
Buy 0.6115 units @ 18395.3p

Target allocation: 15%

Developed World ex UK equities

Split between four funds covering North America, Europe, the developed Pacific, and Japan1.

Target allocation (across the following four funds): 51%

North American equities

BlackRock US Equity Tracker Fund D – OCF 0.18%
Fund identifier: GB00B5VRGY09

New purchase: £187.5
Buy 151.58 units @ 123.7p

Target allocation: 25%

European equities excluding UK

BlackRock Continental European Equity Tracker Fund D – OCF 0.18%
Fund identifier: GB00B83MH186

New purchase: £90
Buy 56.533 units @ 159.2p

Target allocation: 12%

Japanese equities

BlackRock Japan Equity Tracker Fund D – OCF 0.18%
Fund identifier: GB00B6QQ9X96

New purchase: £52.50
Buy 39.803 units @ 131.9p

Target allocation: 7%

Pacific equities excluding Japan

BlackRock Pacific ex Japan Equity Tracker Fund D – OCF 0.22%
Fund identifier: GB00B849FB47

New purchase: £52.50
Buy 24.741 units @ 212.2p

Target allocation: 7%

Note: OCF has gone down from 0.24% to 0.22%

Emerging market equities

BlackRock Emerging Markets Equity Tracker Fund D – OCF 0.28%
Fund identifier: GB00B84DY642

New purchase: £75
Buy 68.997 units @ 108.7p

Target allocation: 10%

UK Gilts

Vanguard UK Government Bond Index – OCF 0.15%
Fund identifier: IE00B1S75374

New purchase: £180
Buy 1.411 units @ 12755.24p

Target allocation: 24%

New investment = £750

Trading cost = £0

Platform fee = 0.25% per annum

Average portfolio OCF = 0.18%

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

Take it steady,

The Accumulator

  1. You can simplify the portfolio by choosing the do-it-all Vanguard FTSE Developed World Ex-UK Equity index fund instead of the four separates.

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