WWhile my brain struggles to admit that it’s 2026, now seems like an ideal time to dive back under the duvet of 2025. (Still warm from the glow of double-digit stock returns or the world on fire – not sure which!)
Somehow it never seems like a good time to invest. And yet Monevator’s Slow and steady model portfolio earned 9.4% in 2025.
That is the third year in a row that the portfolio has risen more than 9%. Not bad for a 60/40 portfolio with a passive investment strategy.
Overall, our model portfolio has achieved an annualized return of 7.3% over a 15-year period from early 2011 to the end of 2025:
The Slow and steady is Monevator’s passive investment portfolio model. It was founded in early 2011 with £3,000. An additional £1,360 is invested each quarter in a diversified range of index funds, with a preference for shares. You can read the origin story and find all previous passive portfolio posts in the Monevator vaults. You can find last quarter’s episode here.
All returns in this post are nominal total returns in GBP unless otherwise stated. Subtract approximately 3% from the portfolio’s annualized performance figure to estimate the real return after inflation.
The journey so far
The past fifteen years have proven to be a favorable era for investing. The portfolio has only suffered one major setback: the 2022 bond crash:
Inflation is the British CPI. Data from the US.
Take a look at this chart and you’ll see that the inflation-adjusted yield line (light green) has not yet reached the December 2021 highs. The portfolio is still down in real terms.
Nominal returns are deceptive!
Many happy annual returns
The difference between nominal and real returns becomes even clearer when we look at the annual results:
Inflation for 2025 is an estimate based on November CPI annual rate.
In real terms, 2022 was a bear market cutback period for our model portfolio. The 2023 annual return was also halved by inflation, and the 2025 return fell by a third.
Nominal returns can make you feel warm and fuzzy. But don’t forget that it is the real revenue that will ultimately help you pay your electricity bill.
Anyway, that’s the negative view. On a more positive note, the same chart shows that we’ve only seen three bad years out of fifteen, and only one otherwise below-average year: the forgettable 2015.
Beyond these dismal numbers, S&S returns reflect a largely exceptional period for investors.
Annual returns of investment categories
Here’s how the portfolio’s constituent funds fared in 2025:
Any fund return lower than the black CPI bar is negative after inflation.
For once, UK shares were the star of the show! In an event as rare as a Briton winning Wimbledon, the unloved FTSE All-Share has made us home investors proud.
If you’re concerned about overexposure to US big tech, a preference for the low-cost, value-oriented UK is one way to solve the problem.
I wonder if the trading apps will now start pushing Greggs stock instead of Nvidia?
(Yes, Greggs has been absent lately. What can I say? I’m long sausage rolls.)
Investment category returns over 15 years
Over the life of the Slow & Steady portfolio, any allocation to global equities is punished with relative disappointment:
Comparison of returns over 15 years for the existing fund range. Note: the actual portfolio consisted only of global real estate, small cap stocks and index-linked bonds for the past ten years.
Diversification beyond the S&P 500 (the main driver of global equity returns) has not (yet) paid off:
- Riskier emerging markets and small caps did not deliver additional returns.
- Commercial real estate acted as a weak equity fund.
- Government bonds lost money in real terms.
But the moral of the story is not that diversification is dead:
With five years remaining of the portfolio’s 20-year mission, I’m not inclined to do anything drastic now.
We rebalance every year to ensure that the Slow & Steady does not drift too far from the preset asset allocation.
Our stock/bond wedges are set at 60/40, so there is no change there.
All that remains is to shift our bond allocation from 40% by 2% per year until our defensive elements are split 50/50 between nominal government bonds and short-term index-linked bonds.
That means that this time:
- Vanguard UK Government Bond index fund drops to 21% target allocation
- The Royal London Short Duration Global Index Linked (GBP hedged) fund rises to a target allocation of 19%
The reason for this is that we believe that short-term index-linked bonds help defend the purchasing power of a portfolio once you are ready to spend it.
(See our decumulation portfolio without cat food for more information on this thinking.)
Inflation adjustments
We increase our regular cash injections by RPI each year to maintain our inflation-adjusted contribution level.
This year’s RPI inflation rate is 3.8%, which is why we are investing £1,360 per quarter in 2026.
That’s an increase from £750 in 2011. We’ve increased the amount we’ve put in by 81% over the last 15 years, simply to keep up with inflation.
New transactions
This quarter’s transactions are as follows:
Emerging market stocks
iShares Emerging Markets Equity Index Fund D – OCF 0.2%
Fund identification: GB00B84DY642
Rebalancing sale: £587.19
Sell 237,785 units for £2.47
Target allocation: 8%
Global property
iShares Environment & Low Carbon Tilt Real Estate Index Fund – OCF 0.18%
Fund identification: GB00B5BFJG71
New purchase: £483.11
Buy 204,172 units for £2.37
Target allocation: 5%
Developed world equities, ex-UK
Vanguard FTSE Developed World ex-UK Equity Index Fund – OCF 0.14%
Fund identification: GB00B59G4Q73
Rebalancing sale: £289.27
Sell 0.359 units @ £805.10
Target allocation: 37%
British shares
Vanguard FTSE UK All-Share Index Trust – OCF 0.06%
Fund identification: GB00B3X7QG63
Rebalancing sale: £590.02
Sell 1,721 units for £342.86
Target allocation: 5%
Global small cap stocks
Vanguard Global Small-Cap Index Fund – OCF 0.29%
Fund identification: IE00B3X1NT05
New purchase: £26.01
Buy 0.052 units @ £502.48
Target allocation: 5%
Nominal gilts (conventional government bonds)
Vanguard UK Government Bond Index – OCF 0.12%
Fund identification: IE00B1S75374
Rebalancing sale: £746.85
Sell 5,466 units for £136.63
Target allocation: 21%
Global inflation-linked bonds
Royal London Short Duration Global Index-Linked Fund – OCF 0.27%
Fund identification: GB00BD050F05
New purchase: £3333.50 (including £269.29 dividends reinvested)
Buy 3075,184 units for £1,084
Target allocation: 19%
New investment contribution = £1,360
Trading costs = £0
Average portfolio OCF = 0.17%
User manual
Check out our broker comparison table for the best investment account options.
InvestEngine is currently the cheapest if you only want to invest in ETFs. Or learn more about choosing the cheapest stocks and shares ISA for your situation.
If this seems too complicated, check out our top picks for multi-asset funds. These include all-in-one diversified portfolios such as the Vanguard LifeStrategy funds.
Interested in monitoring your own portfolio or using the Slow and steady spreadsheet for yourself? Our piece on portfolio tracking shows how.
You might also like a quick refresher on why we think it’s best for most people to choose passive versus active investing.
Take it easy,
The accumulation
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