I don’t know about you but I’ve forgotten all about the AI bubble since the Iran War started. So that’s something.

However, despite every fund we own falling back since Trump went nuts, the Slow & Steady passive portfolio has still managed to eke out a 2% gain since our last check-in three months ago.

Trump go boom-boom

Here’s what happened to the portfolio’s equity funds since the start of the year:

​​Chart from Morningstar. Nominal annualised total returns (GBP).

This chart is as good an example as you could wish for to show that attempting to predict the markets is a massive waste of time.

Everything was going great guns until bombs started dropping on 28 February. No bombs – no reason for the market to plummet.

Was Trump’s decision predictable? Fundamentally, no.

You could argue that the presence of a US carrier strike group in the Gulf meant something was up. But look at the pivotal point on the chart. If a deal had been struck before 28 February, equities would have probably continued upwards.

As it was, it was fastest fingers first on the ‘sell’ button when the market opened on 2 March.

Nobody knew which way the war-cookie was going to crumble beforehand. Apart from a lucky few who took some – ahem – ballsy flutters on the prediction markets, of course.

How did bonds do?

I’m so glad you asked! Here’s the year-to-date performance of the Slow & Steady portfolio’s much-vaunted defensive partnership:

​​Linkers = World index-linked government bonds hedged to GBP. Gilts = Nominal UK government bonds (All Stocks).

Nominal government bonds do not love an inflationary supply shock – as we saw in 2022.

Hence they’re down again, and standing by for a slump more to their liking. (Think something more along the lines of the Dotcom Bust or the Global Financial Crisis, where demand and liquidity dry up.)

More pleasantly, our index-linked bond fund looks reasonably solid.

It’s a short-term bond fund for one thing, which makes it inherently less volatile than a longer duration gilts tracker. Plus, it’s chock full of inflation-linked bonds. So you’d hope it would perform tolerably well when the consumer price index ticks up.

That said, the very same fund did not cover itself in glory in 2022. Read our individual index-linked gilt vs linker fund comparison for the gory details.

Though it took a while to reveal itself, our passive portfolio’s greatest weakness has proved to be its lack of defensive diversification. If I was starting again now, our model portfolio would include cash, gold, and commodities too.

Commodities are the one asset that is positively thriving right now.

Portfolio raw numbers time

What? You think I’ve been stalling? Well, maybe I have… Here’s the latest scores-on-the-doors, brought to you in CrisisWhatCrisis-o-vision:

The Slow & Steady is Monevator’s model passive investing portfolio. It was set up at the start of 2011 with £3,000. An extra £1,360 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 instalment can be found here.

All returns in this post are nominal GBP total returns unless otherwise stated. Subtract about 3% from the portfolio’s annualised performance figure to estimate the real return after inflation.

The portfolio’s overall annualised return since inception is 7.36%. Subtract average inflation over the period and the real return is about 4.5%.

That will do nicely. The average annualised real return for a 60/40 World/gilts portfolio is 4% since 1900. ¹

The story over the portfolio’s lifetime has essentially been equity returns good, bond returns bad.

Grinding out a result

It’s easy to lose sight of, but the Slow & Steady has grown from £3,000 to over £100,000 in 15 years.

That figure places the model portfolio well above the average £80,000 held in pension wealth by people in my age bracket, according to this 2025 analysis of ONS data.

What’s more, this six-figure sum was achieved with relatively modest monthly contributions (£250 a month in 2010 money) and zero pension tax relief, too. (The portfolio is assumed to be held in an ISA.)

No fancy funds or strategies were used. No leverage or market timing. No kung-fu or specialist knowledge required.

All anyone had to do was follow the rules of a straightforward passive investing strategy and keep the faith long enough for it to pay off. (That’s the hard bit.)

It works and there’s no need to over-think it.

The long-term picture

The next chart shows the portfolio’s growth trajectory, along with the various setbacks along the way:

That is one boring chart. It looks like nothing happened. The portfolio has gently wafted up, and world events failed to knock it down again for any period longer than nine months. We shrugged off the drip-feed of fear.

That said, our model portfolio is still down from its December 2021 peak in real terms (See the lighter green line). That only goes to show how pernicious inflation can be.

Fund / asset class returns

Here’s a breakdown of the portfolio’s individual fund performance, with an eye to the short and long-ish runs:

​​Data from Morningstar. Nominal total returns (GBP). 10-year figure is annualised.

The short-term view tells us that equity diversification is back in vogue. Emerging markets and UK equities beat the MSCI World – and even the S&P 500 – over the last two years.

How many people don’t even look at UK equities anymore because the British economy appears moribund and the S&P 500 has smashed all-comers for years?

Stop performance chasing, people!

Okay, that’s enough tilting at windmills for one update.

New transactions

Every quarter we throw £1,360 of red meat to the wild dogs of the market. Our stake is split between our 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:

Emerging market equities

iShares Emerging Markets Equity Index Fund D – OCF 0.19%

Fund identifier: GB00B84DY642

New purchase: £108.80

Buy 42.2377 units @ £2.58

Global property

iShares Environment & Low Carbon Tilt Real Estate Index Fund – OCF 0.17%

Fund identifier: GB00B5BFJG71

New purchase: £68

Buy 27.2076 units @ £2.50

Developed world ex-UK equities

Vanguard FTSE Developed World ex-UK Equity Index Fund – OCF 0.14%

Fund identifier: GB00B59G4Q73

New purchase: £503.20

Buy 0.6141 units @ £819.40

UK equity

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

Fund identifier: GB00B3X7QG63

New purchase: £68

Buy 0.1848 units @ £367.93

Global small cap equities

Vanguard Global Small-Cap Index Fund – OCF 0.29%

Fund identifier: IE00B3X1NT05

New purchase: £68

Buy 0.1272 units @ £534.69

UK gilts

Vanguard UK Government Bond Index – OCF 0.12%

Fund identifier: IE00B1S75374

New purchase: £285.60

Buy 2.1073 units @ £135.53

Global inflation-linked bonds

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

Fund identifier: GB00BD050F05

New purchase: £258.40

Buy 234.2702 units @ £1.103

New investment contribution = £1,360

Trading cost = £0

Average portfolio OCF = 0.17%

User manual

^{Disclosure: Links to platforms may be affiliate links, where we may earn a commission. This article is not personal financial advice. When investing, your capital is at risk and you may get back less than invested. With commission-free brokers other fees may apply. See terms and fees. Past performance doesn’t guarantee future results.}

Take a look at our broker comparison table for your best investment account options.

Or learn more about choosing the cheapest stocks and shares ISA for your situation.

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

You might also enjoy a refresher on why we think most people are best choosing passive vs active investing.

Take it steady,

The Accumulator

1. Jan 1900 to Dec 2025 real total returns in GBP.

The post The Slow and Steady passive portfolio update: Q1 2026 appeared first on Monevator.

What caught my eye this week.

The post Weekend reading: Hubris on hold appeared first on Monevator.

I have written a few times in recent years urging Monevator readers not to give up on gilts. (That is, UK government bonds.)

That wasn’t because I’m a diehard gilt groupie. On the contrary, for most of my investing life my allocation to bonds has hovered closer to the flatline than investing orthodoxy would think wise.

However even as rootin’, tootin’, stock-lovin’ active investor I could see that many passive investors were throwing the bond baby out with the bond bear market bathwater.

Who could blame them after the post-Covid, post-Liz Truss bond rout?

As interest rates rose with inflation coming back from the dead, grossly-overpriced bonds crashed. The result was one of the worst stints for UK investors in government bonds of all-time.

Here’s how the iShares core UK 10-year government bond fund swan-dived into the Liz Truss lows of 2022:

Source: Fiscal AI

You don’t need to be Warren Buffett to guess what seeing ‘safe’ assets plunge like this did for investor appetite.

“Be greedy when others are writhing on the floor, breathless, and calling for mummy”, anyone?

No thanks, said many shell-shocked would-be bond buyers.

Once more unto the breach

However, if investors did make a mistake in trusting the market’s wisdom before the bond crash, it was by buying bonds on negative yields that could only deliver a negative return in the long run.

Yet following the bond rout that troughed in 2022, yields-to-maturity were positive across the curve.

At least in nominal terms, gilts were now priced to actually reward investors for holding them.

So it seemed to me some investors were closing the door on gilts after the horse had bolted, run into a ditch, and been winched out looking beaten-up, sure, but ready to run again.

Note: I wasn’t suggesting UK government bonds were a surefire winner. Nor that they’d give Bitcoin or the Magnificent Seven mega caps a run for their money.

It was just that with yields restored to something closer to normal, I felt they could be added to portfolios once more without all that existential negative yield drama.

Gilt trips

So how have gilts performed since those dark days of 2022, when Britain pondered whether a lettuce would do a better job of steering the ship of state?

Well, if you’d muttered “jog on Investor” on reading my articles and kept on shunning gilts, you’d be happy enough. That’s even if you’d parked your money in cash or money-market funds – let alone bought more equities instead.

Because gilts have meandered around doing nothing much since. Indeed with hostilities in Iran, the resultant inflation scare saw the 10-year gilt yield break briefly above 5%, before it fell back on news of a tentative ceasefire:

Source: CNBC

Remember, yields move inversely to price with bonds. All things equal, higher yields on gilts reflects lower prices for existing gilts in the market.

Cor Blighty

As an aside, it’s worth noting that Britain is still considered something of a basket case by international investors.

As CNBC reported towards the end of March:

One of the most alarming aspects of the sell-off in risk assets after the attacks on Iran, from a British perspective, has been how gilts – U.K. government IOUs – fell more sharply than bonds issued by any other G7 economy.

Take the 10-year gilt, the most liquid and most widely-traded of all gilt maturities and the best proxy for the U.K. government’s long-term borrowing costs.

At one point […] the yield hit 5.115% – a level not seen since the global financial crisis in April 2008.

These moves were much sharper than for other G7 countries. Indeed among similar economies only Australia has a higher 10-year yield.

The CNBC author covered the reasons why:

One is that the Bank of England’s policy rate was already the highest of any G7 central bank and Britain’s rate of inflation is higher than that of its peers.

A second is that interest rate expectations for the U.K. have changed more dramatically than any other G7 economy. Before the conflict, the Bank was expected to cut its main policy rate this month – sparking a sharper reaction in gilts.

A third is that, Japan aside, no G7 economy depends more on imported gas – the price of which has surged.

Fourthly, investors dislike U.K. politics. The surge in energy prices has raised fears of higher spending – funded by growth-destroying tax increases or more borrowing – to support households. They also fear that May’s local elections, should the governing Labour Party perform poorly, will result in a leadership challenge to Prime Minister Keir Starmer and his possible replacement by a more left-wing rival.

But demanding a premium to hold gilts is not new. It was reinforced to the British public most starkly in recent times when, in September 2022, gilts sold off violently after Liz Truss’ government unveiled a mini-Budget including £45 billion worth of unfunded tax cuts.

Market participants spoke of investors demanding a ‘moron premium’ to hold gilts over bonds of equivalent duration issued by peers.

As I’ve pointed out many times in our debates about Brexit, Britain is a relatively small nation that relies on trade for its economic health and ‘the kindness of strangers’ to shore up its finances. It’s been prone to higher inflation than the continent for generations. In leaving the trading bloc we’ve increased those vulnerabilities.

Add in an energy shock and an anti-climactic regime change in Downing Street and there’s still very little for global bond investors to get excited about.

Greater expectations from gilts

So far, so soggy then for gilts.

However there’s still that silver lining to higher bond yields. Namely higher expected returns.

As we pointed out back in 2022:

Rising bond yields are positive for long-term investors who can ride out the capital losses and eventually take advantage of fatter income payments.

Much of the doom and gloom after the Financial Crisis concerned the fact that low yields meant miserly long-term bond returns. It dragged down the equity risk premium as well.

Now, rising rates and a return to the old normal is leaving that particular threat in the rear-view mirror.

Higher coupons should lower bond volatility. They plump up your safety cushion against equity losses, too.

For sure as our article pointed there was a risk that yields would continue to rise.

Inflation will always be a threat to conventional bonds, too.

But the main point was that investors reeling from nominal losses of 30% or more in their gilt allocations were very unlikely to suffer that again from the 2022 starting point. An unusually extreme situation had unwound.

And sure enough, we haven’t seen a repeat of that carnage. While gilt returns have been the definition of ‘meh’ since then, they’ve not blown up any portfolios.

Rather, here’s how owning that iShares 10-year gilt fund (ticker: IGLT) and reinvesting the coupon has performed since the end of 2022:

Source: Fiscal AI

Okay, nobody is posting rocket ship emojis on the back of a 3.4% total return. But it is positive.

What about long duration index-linked bonds? How have they done since I pondered a potential opportunity in index-linked gilts in summer 2023?

Well here’s the total return of IGLT’s index-linked sister fund from iShares (ticker: INXG):

Source: Fiscal AI

That return is negative, which is disappointing – but it’s not negative by much.

Also the opportunity my article was flagging (early) was the emerging chance to buy a positive-returning index-linked ladder at last.

Still, I can’t deny I thought INXG might bounce back a bit more quickly than this.

Short thrift

On the other hand – and especially in his articles since 2022 – The Accumulator has repeatedly suggested that nervous would-be gilt investors should shorten their bond allocation’s duration.

That is, that they should plump for shorter-term bonds (or bond funds) that are less susceptible to interest rate risk.

So here’s how Amundi’s 0-5 year gilt fund (ticker: GIL5) has done since the 2022 annus horribilis:

Source: Fiscal AI

That’s more like what most people want from their bonds!

If we could guarantee even modest ‘up and to the right’ returns from gilts then we’d all be up for owning them. (Spoiler alert: we can’t guarantee that.)

Long odds

At the other end of the spectrum, those ultra long-term gilts like the cultish Treasury 2061 (ticker: TG61) we looked at last summer did rally, but they’ve more recently spluttered out with the war and inflation fears.

For the record, as I type you can lock-in a yield-to-redemption of 5.3% on TG61.

My friend who I quoted in that 2025 article owns his allocation of ultra-long gilts for tail-risk depression insurance. And where else can you get insurance that pays you a decent income while you wait?

It’s sure to have its moment in the sun some day… isn’t it?

Gilts: complex

What you think this wander through the recent returns from gilts proves perhaps depends on what you thought back in 2022. There’s a bit of something for everyone.

I’d hope though that if you honestly expected the intense bond pain to continue, then you at least now take the point about a one-off reset from negative yields, and also how higher yields are good for future returns.

More generally, let’s filch a graphic from The Accumulator. Here’s a quick reminder for why most investors would want to own some government bonds:

You’ll notice ‘stonking gainz’ is absent from TA’s summary.

Most investors aged over 30 or so are advised to own some bonds (or similar lower-risk stuff such as cash) because going all-in on the likely best-performing asset – equities – may be too risky and volatile.

And now gilt yields are normal again, their role as a potential portfolio stabiliser has been restored, too.

Indeed, turn your eyes from the stock market bull run and gilts arguably look quite attractive. The likes of Vanguard expect 10-year gilt returns of around 5-6% a year over the next decade.

This isn’t a bold prediction. The starting yield (to redemption) of gilts is a great guide to your expected returns. Remember, 10-year gilts are already yielding close to 5%.

Goldilocks gilts

Of course we all learned some lessons from 2022.

I’d still contend that Monevator was relatively cautious about gilt returns for a passive-focussed site in the near-zero years before the crash, as a search of our archives will attest. (This prescient warning by The Accumulator from 2016 about negative-yielding index-linked gilts is a case in point).

However it’s fair to say we took our lumps, too.

Our house view now is that prudent diversification should also consider holdings of cash, gold, and potentially commodities. As well as even more careful thinking about bond duration, and perhaps making use of gilt ladders if pure inflation hedging and/or a sequence of real cashflow returns is all-important to you (such as if you’re in retirement and drawing an income).

It’s also true that if governments eventually try to inflate away their ballooning national debts, then the returns from conventional gilts could yet be very poor in real terms.

On the other hand, perhaps they won’t or can’t. And there’s always index-linked gilts to own, too.

Remember all investment choices involve trade-offs. Nothing is 100% ‘safe’ and risk cannot be created or destroyed – only swapped for other kinds of risk.

In particular, if you believe there’s no downside to holding cash or MMFs instead of, say, intermediate-duration gilts, then The Accumulator has shown that historically it would have cost you via lower returns.

Finally, it’s been ages since we had a prolonged bear market for shares. The notion that you had to make the case for an allocation to fixed income will look very strange in such times, if history is any guide.

The post Gilts: hoping for the best, experiencing not the worst appeared first on Monevator.

A Monevator reader wrote, “I’m 100% invested in equities. I’m 56 and still think there’s time to accumulate and weather the roller coaster of global markets. Am I being foolish?”

I thought this was a brave and important question to ask. The query comes up a fair bit and speaks to a dilemma that many of us face.

The post Is 100% equities worth the risk? appeared first on Monevator.

Please see the end for a note on the future of Weekend Reading.

Living in an investing and financial independence bubble – researching both all week, talking to FIRE-d contributors and readers, and occasionally wondering if I should take down the shingle on the Monevator door to go travelling myself – means some things that shouldn’t shock me still do.

How little most people save, for example. Or what a typical office worker pays for lunch.

This week’s eye-opener was a graph from Which:

I know most people have pocket-sized private pension pots. And also that the Monevator readership is unusual – by being substantially better off, or by being younger but on track to get that way.

I also know defined benefit pensions (the purple chunk in the graphic) are a huge deal for the current generation of pensioners – it’s just there’s not much we can usefully say about them and I’ve never been within a maritime exclusion zone of getting one, so they don’t feature much on Monevator.

I was still struck though by how small a contribution private pension savings (the mustard-coloured block in the graphic) and investments (in green) make to pensioner incomes.

Because those mustardy and green bars are our bread and butter on Monevator.

From our hundreds of articles on making such pots bigger to our growing coverage on how to spend them down, we’re focused on a strategy that barely registers in the typical retiree’s life.

Stately progress

Of course this should change a bit. Defined (occupational) pensions have all but vanished from the private sector. Millions of workers are now growing investment pots that will comprise a big chunk of their retirement incomes in 20 to 30 years.

But the sobering fact is for most Britons, the State Pension is and will remain all-important in retirement.

From the Which article:

The DWP’s figures highlight how vital the state pension is.

Almost all pensioners (98%) receive it, and benefits overall make up a large share of income – 58% for single pensioners and 40% for couples.

The state pension is a particularly important source of income for those in low-income households. For the lowest-income pensioners, benefits make up the majority of their income – 79% for couples and 88% for single pensioners.

By contrast, for the highest-income groups, this falls to 17% and 29%.

This is exactly why we don’t think the State Pension will ever be scrapped, incidentally.

Weekend Reading over email

Nothing good lasts forever. Just consider my long-lost six-pack. Or, indeed, my ability to get through a six-pack on a weeknight. ¹

Well, that great random number generator of change has come for Weekend Reading.

From next week onwards, only the first Weekend Reading of the month will be visible to non-members on the Monevator website.

Logged-in Mavens and Moguls members will be able to browse it on-site as normal, like the special people they are. Mavens membership only costs a couple of pizzas a year, so perhaps this is your prompt to sign up? Thanks in advance!

If you’d rather not join for some reason, then for now and for the foreseeable I’ll also continue to send Weekend Reading to all email subscribers. Whether free email subscribers or members.

Everyone will also be able to comment below the article, even if they can’t read the article on the site.

• Simply subscribe via email to keep getting this weekly dose of investing links.

A majority of regular readers now get Monevator over email anyway. But I appreciate this shift will inconvenience a few of you – particularly non-members who like to use RSS.

Please know I’m not motivated by making the world a little worse for you.

A traffic jam

Most of you probably aren’t very interested in the decline and fall of the open Internet, I realise.

You can still find free articles to read, and using ChatGPT is fun.

I’m much the same myself. However the fact is this shift is destroying the viability of independent websites.

The big tech sites have seen their traffic fall by around 60%, for instance. US personal finance site NerdWallet has seen its traffic decline by 73%! We’ve seen our traffic scythed away, too.

If these traffic drops were because people no longer wanted guidance about buying their next TV or which credit card to get, then fair enough.

But that’s not the case.

People do still want and need information. However it’s the big AI tech companies that are giving it to them. And their AI models were trained on and still consult these very websites!

Instead of sending the original creators their readers though – and so affording them a viable business model – the AI companies capture 99% of the attention and most of the value for themselves.

Cue a devastated online media landscape.

I’ve been warning this would happen for years. Read this fresh article by Anil Dash if it’s all new to you.

Monevator lives on only because of our generous members’ support. Moving Weekend Reading to email probably won’t directly boost membership much, but it helps us be more in control of our destiny.

Beyond that, I’ve been sending hundreds of thousands of clicks out annually across the web freely for nearly 20 years with these roundups. Often to the same stable of websites. But for years now almost nobody links back. And link lists don’t do our search rankings much good either, for what little that’s worth these days.

So evolve we must. Let’s see how it goes.

• Become a member and nothing changes. Or sign up on email – for free – and read the links there.

Have a great long weekend!

From Monevator

How to choose the best global tracker fund – Monevator

Have a plan well ahead of remortgaging – Monevator

From the archive-ator: Do not sell [Six years ago…!] – Monevator

News

UK food inflation could hit 9%, trade body warns – Guardian

All the price hikes coming in April – Be Clever With Your Cash

FCA confirms motor finance redress scheme – FCA

House prices up 2.2% in March, but outlook uncertain says Nationwide – Mortgage Solutions

Why younger retirees are earning more from their pensions – Yahoo Finance

Half of UK households struggle to cover cost of essentials – LBC

Four ways Trump’s year-old tariffs have changed the global economy – BBC

Ranked: the fastest-growing major economies [Infographic] – Visual Capitalist

Super-rich may have hidden $3.55tn from tax officials, says Oxfam – Guardian

Waymo is doing more than 500,000 paid robotaxi rides every week – Sherwood

Products and services

^{Disclosure: Links to platforms may be affiliate links, where we may earn a commission. This article is not personal financial advice. When investing, your capital is at risk and you may get back less than invested. With commission-free brokers other fees may apply. See terms and fees. Past performance doesn’t guarantee future results.}

What happens if you overpay into an ISA? – Be Clever With Your Cash

Monzo and Revolut take banking battle to the playground – City AM

Get up to £1,500 cashback when you transfer your cash and/or investments to Charles Stanley Direct through this affiliate link. Terms apply – Charles Stanley

Best bank account switching deals in April – Which

Can you get a mortgage on a low income? – Be Clever With Your Cash

Get up to £3,000 cashback when you open or switch to an Interactive Investor SIPP. Terms and fees apply, affiliate link – Interactive Investor

This Premium Bonds alternative offers a £250,000 jackpot – This Is Money

Traditional farmhouses for sale, in pictures – Guardian

Comment and opinion

Has the world become more uncertain for investors? – Behavioural Investment

New rules could affect your State Pension if you live abroad – Which

Chekhov’s gun – Fortunes & Frictions

What the 4% rule creator thinks today [Podcast] – White Coat Investor

How to own the best stocks – A Wealth of Common Sense

Does it really make sense to retrain as a plumber? [Paywall] – FT

Ode to a 2009 Honda Accord – The Belle Curve

When your dreams outrun your dollars – The Net Worthwhile Weekly

Simple living in Suffolk again – Simple Living in Suffolk

What’s the value of one day? – The Root of All

Naughty corner: Active antics

Is the US housing market starting to crash? – Of Dollars and Data

Strategy is entering its desperate stretch [Paywall] – FT

Alpha out of extreme portfolio construction – Morningstar

Kindle book bargains

Million Dollar Weekend by Noah Kagan – £0.99 on Kindle

The Moneyless Man by Mark Boyle – £0.99 on Kindle

Red Roulette: Inside China by Desmond Shum – £0.99 on Kindle

The Panama Papers by Frederick Obermaier and Bastian Obermayer  – £0.99 on Kindle

Or pick up one of the all-time great investing classics – Monevator shop

Environmental factors

The UK’s most successful growth industry: organised waste crime – Guardian

The ins and outs of plug-in solar panels – This Is Money

More than 1.3 million tonnes of fish taken from UK protected waters – Greenpeace

The green utopia in Colombia that tried to reinvent the world – BBC

Trump move threatens endangered species in the Gulf of Mexico – Guardian

Robot overlord roundup

How one man used AI to design a cancer drug for his dog – via Instagram

OpenAI is now valued at $852bn. That’s about five Disneys – Sherwood

AI is pushing up the price of computer gaming – Guardian

Claude’s popularity with paying customers is skyrocketing – TechCrunch

Meta’s sunglasses left this reviewer feeling like a creep – Guardian

Data on AI use from surveying 6,000 company execs [Research] – SSRN

Tech and war mini-special

The human cost of compressing the ‘kill chain’ – Guardian

Is it 1914 in America? – New York Times

Loaded dice will blow up in our faces – Spencer Jakab

Not at the dinner table

Brexit and bad vibes – Brexit and Brexitism

In Hungary, the first post-reality political campaign – The Atlantic

The Ozempicization of the economy – Kyla Scanlon

Basic Income’s roots in 18th Century England – The Conversation

The facts show immigration doesn’t cause crime. People just don’t believe it – MSN

Moscow is benefiting from the Iran war, for now – CNBC

A repudiation of US values – Abnormal Returns

Donald Trump’s badly-timed Iran war narrative – Drezner’s World

Off our beat

The horrors that could lie ahead if vaccines vanish – Pro Publica

Child’s play – Harper’s

Seeing like a spreadsheet – David Oks

Why are UK energy costs so high? [Podcast] – Chatham House

How the war in Iran hits farmers in California – L.A. Times via MSN

Why Florence started the Renaissance – Uncharted Territories

The centuries-old origins of current fairy fiction – BBC

Making peace with your inner critic – Abnormal Returns

Remote work can blunt the fertility decline – CEPR

Incentives matter: Nazi edition – Klement on Investing

Long odds and unseen differences – Seth Godin

And finally…

“The rich ruleth over the poor, and the borrower is servant to the lender.”
– Proverbs, King James Bible

Like these links? Subscribe to get them every Saturday. Note this article includes affiliate links, such as from Amazon and Interactive Investor.

1. Note: that’s just a rhetorical flourish. I’m barely poisoning myself with more than a couple of units a week these days.

The post Weekend reading: our rare breed pensioners, and how to read these links in future appeared first on Monevator.

Apparently hundreds of thousands of Brits don’t ever switch their mortgage. This is despite the fact that staying on an old deal instead of remortgaging promptly can be horribly expensive.

And I don’t mean ‘splurging on a fancy lunch’ expensive, either. More like ‘buying a brand new VW Golf and driving it straight into the sea’ expensive. Even delaying remortgaging by just a couple of months could cost you the same as a family holiday.

As a Monevator reader, you presumably don’t enjoy setting tenners on fire!

Interest rates can change very rapidly. 2026 began with mortgage rates creeping down, and so any delay in remortgaging didn’t matter much.

However in the past month or so, ‘politics’ has caused mortgage rates to spike. The difference in interest payable between someone who locked in a mortgage rate early and someone who is just getting around to it could be pretty chunky.

So what’s to be done?

Planning ahead to find a good new deal before your old mortgage expires is obviously ideal. But even if the end of your deal is fast approaching – or it’s passed already – you can still take some of the sting out of recent rate rises.

How mortgages catch people out

In some countries, all mortgages are fixed products. You take out a 30-year mortgage at a 5% interest rate, and if you do nothing else then you pay that 5% interest for 30 years.

Job done.

But in the UK? Not so. Though fintech start-ups occasionally tout fixed-for-life mortgages as the future, the idea still hasn’t caught on.

Instead, many of us buy mortgages the same way we get our broadband. We find a good deal for the first few years, and then when we’ve stopped paying attention our charges are whacked up.

Sure, a bank will reel you in with an attractive 3.5% fixed rate. But that rate won’t last more than a few years before it shoves you on to what they call the Standard Variable Rate (SVR).

Which perhaps we should rename the SVR the ‘Seriously Villainous Rate’ – because despite the Bank of England’s Bank Rate being just 3.75% as I type, the SVR at some lenders exceeds 8%!

Now, that SVR will rise and fall with Bank Rate. So even on an SVR you might see your repayments fall.

You might also ask: do a few percentage points really matter in the grand scheme of things, anyway?

Well, yes, when you’re borrowing hundreds of thousands of pounds. Small differences add up.

The cost of higher rates can be colossal

Let’s meet Bill.

Bill is a smart guy. He gets his favourite craft beer delivered. It’s cheaper and better that way than the pub. Bill also loves trading stocks on his phone. He thinks he’s pretty savvy.

But Bill spends all day in meetings and on calls, so he doesn’t really want to deal with more admin when he gets home. He’s not sure where ‘sort out the mortgage’ comes on his To Do list – but it’s definitely below ‘veg out on the sofa with an Uber Eats and Young Sherlock.’

Back when he bought his house, Bill borrowed £750,000 over 25 years on a two-year fixed rate deal. (Yes it’s a lot of money. Bill works in London and he likes a garden. It’s expensive out there.)

• For the first two years, at 3.5% interest, Bill repaid £3,755 per month.

But recently, Bill has seen a couple of emails from his bank that hasn’t got round to reading…

…and wham, bam, now he’s paying 8% as his fixed rate deal expires and he drops onto the bank’s SVR.

• Bill’s bank will draw £5,789 from his account next month. And he’ll continue to pay £2,034 extra every single month on his mortgage until he sorts it out.

That’s enough to buy a new car over a full year. And this is just to service the higher interest cost, remember – Bill is not paying off his mortgage any faster.

Delaying remortgaging by just a few months is bad enough

We can all see how this should go.

You’re switched on about your mortgage options. So six months before your cheap rate expires, you’re already looking out for deals. Perhaps you’ve got a mortgage broker on the case, too.

The result: everything is sorted ahead before the deadline, and neatly tied with a bow.

But what if that doesn’t happen? Or if life took over for a while, and you find yourself in Bill’s situation?

Perhaps you’ve been dealing with a sick relative, or trying to dig your way out of some nightmare at work? You know the mortgage needs to be sorted. But you’ll get to it when you’re ready.

Most people would think that’s a reasonable decision during a stressful time.

But let’s go back to Bill’s £750,000 mortgage and look at a few potential increases when on an SVR:

Even when you start on a higher initial rate of 4.5%, that SVR hike still stings.

It’s the definition of paying money for nothing.

Switched on

I understand why most ‘switch to save money’ messages get drowned out amid the noise of daily life.

Even I’m not very motivated to pocket an extra 20p by switching to a different brand of baked beans.

But given that being just a month late with your mortgage switch could cost you a four-figure sum, I’d say this is one opportunity to keep track of.

Wealth warning Mortgages are big and complex and mistakes can involve life-changing sums of money. Seek professional advice if you need it. For instance from an FCA-regulated mortgage broker. Some brokers may charge a fee, but others will not charge you and instead get a commission from the lender.

Why doesn’t everybody switch?

If it’s such a no-brainer to switch, then why do hundreds of thousands of people routinely pay the SVR?

Perhaps some customers just don’t know any better. They haven’t realised they can switch to another lender. After all, they took out a 25-year mortgage, and their bank probably won’t fall over itself to tell them how to reduce their interest payments.

For other people, remortgaging is just on the back burner. Something to deal with when life is quieter.

Maybe people believe that they owe so little that there’s no point in remortgaging? That’s a personal decision, but it’s worth knowing that various lenders do offer mortgages for very small sums. Barclays and TSB, for example, offer mortgages for as little as £5,000.

People might also have seen their financial situation change for the worse. For example, they lose their job. It could be impossible to move to a new lender.

Even so, in the vast majority of cases, people can still remortgage onto a new deal with their existing lender. ¹

In all these cases, it can’t hurt to ask a broker what your options are to get you off the SVR and onto a more competitive deal.

Remortgaging takes time

If you’re switching to a new lender, there is legal paperwork that takes its sweet time to resolve.

For starters the new lender probably wants to make sure that the house they’re lending against actually has four walls and a door. Perhaps they also want to verify you have an income to pay them back.

They’ll also want to get their name recorded with the Land Registry so you can’t sell the house and flee to the airport with a suitcase full of cash.

So it can take several weeks to switch mortgages. Even if you’re fairly on top of things, you might end up on the SVR for a period.

I once spent a month on the SVR simply because the solicitors took so long to process the paperwork.

Thankfully – after a fairly stuffy email to their complaints department – the solicitors coughed back up the additional interest I’d incurred. But it was hardly ideal.

If you do want to play the field with different lenders, get the ball rolling early on. Six months before your deal expires is recommended. That gives you three months or so for the legal gremlins to sort themselves out after you’ve made your decision.

If you haven’t got that much time

What if you’ve already found yourself on a SVR? Or you will be on one in a few weeks’ time?

Trying to tie down the best possible deal from a range of lenders could see you paying bucketloads of interest on that higher SVR whilst you wait for the cogs to slowly turn.

Instead the quickest solution, generally, is to swap to a new deal with your existing lender, typically via what is known as a ‘product transfer’.

Your current bank won’t need mountains of new legal paperwork. They validated your financials when they first offered you a mortgage.

According to an expert writing recently in the Financial Times:

…the product transfer [has] come into its own since the pandemic.

In 2006, when there was a far smaller proportion of fixed-term deals, there were 1.14mn remortgages. Last year, there were 320,000 remortgages – and over 1.54mn product transfers.

Rather than borrowers being left to drop on to typically much higher revert-to rates or arranging a remortgage, they are now incentivised to transfer to a new fixed rate with their existing lender.

The main benefit is that you don’t need to pass any additional affordability tests – which can be tricky, given the higher interest rates, and the fact that high house prices and stricter lending criteria mean buyers’ finances are typically stretched to begin with.

The downside? It might not be the cheapest mortgage offer you could get.

Another option is to again quickly switch to a new mortgage with your existing provider, but then to start that longer process of looking at other lenders.

Your current lender probably won’t appreciate you setting up a mortgage that you’ll ditch in a few months, but hey ho. That’s their problem, not yours.

Although…you’ll need to be wary of Early Repayment Charges (ERCs).

The too-early bird gets a worm

ERCs are used by banks to stop their customers playing both sides.

If you could take out a fixed rate mortgage, see rates drop, and then switch to a lower rate elsewhere, your original lender wouldn’t make the profit it anticipated when it originally offered you a mortgage.

So on some products (especially fixed rates) you’ll incur percentage-based charges for paying off the mortgage early. However there are plenty of mortgage deals around that don’t come with such penalties.

If you switch from your SVR to a cheaper product with no ERC, then you’ve dealt with the sky-high SVR. Now you can scour the market for the very cheapest deal at your leisure.

And when the time comes to move to your new lender, your ‘No ERC’ mortgage can be settled without incurring thousands in penalty charges.

Don’t let product fees stop you

You might now be thinking, “but a new deal will come with a £999 product fee!”

And sure, some do.

But using this as a reason to delay switching might not make much financial sense. You could be incurring thousands of pounds in extra interest just to avoid a £999 fee.

What’s more, there are plenty of mortgages out there with no or negligible upfront fees. The trade-off typically being a higher mortgage rate.

In some cases, such no-fee deals are your best option – especially if you’re only planning to pay that higher rate for a few months.

Brokers can advise you on all of these scenarios and figure out which will ultimately be cheapest. Though if you are thinking of making two switches, it’s worth mentioning this to them from the get-go.

Remortgaging when you have plenty of time

There are some considerations for people with more time to think about, too. For one thing, the government’s Mortgage Charter remains active – for the 49 lenders that signed up to it, anyway.

(What do you mean you never heard of the mortgage charter?)

For our purposes when remortgaging, one important aspect of the charter is it says customers can lock-in a new deal up to six months before their fixed rate deal ends.

Until very recently, mortgage rates were gradually easing down. Hence this flexibility wasn’t really a big deal. But now, with mortgage rates flying up, securing a ‘good for now’ rate ASAP has become another key weapon in your money-saving arsenal.

If the market moves in the following months and a better deal becomes available, you can swap to that better deal. Hence this way you’re protected against rates rising in the final three to six months of your deal’s term, but you’ve got a backstop to avoid landing on the SVR if something changes in the meantime.

With lots of time to spare you can also consider whether you want to work directly with a lender’s advisers, or go with an independent broker.

Personally – after a two-hour grilling from a building society about when I might be replacing my sofa and endless questions about obscure items on payslips – I’d pick the broker every time.

At least when my broker rants about how idiotic the underwriters at my bank are, he’s the one that spent hours bashing his head against the wall, not me.

A remortgaging checklist

Given that being a couple of months late to remortgaging might cost more than your summer holiday, I think it’s fair to suggest we should all plan ahead.

Here’s the steps to take:

1. Check the expiry date of your mortgage’s initial rate. Put it in the calendar or write it on the kitchen wall.
2. Don’t wait for your lender to nudge you. Get the ball rolling six months ahead of the expiry date.
3. Approach your lender or a broker. See what deals you can lock in now, and check any penalties for cancelling.
4. Remember to re-check. Make sure there isn’t a better deal out there as the switch date approaches.
5. If you’re particularly keen, continue to recheck every few months or annually. Consider any fees you’d pay for settling the mortgage early – those ERC penalties – if better rates emerge.

And if you’re reading this on an SVR, then don’t delay getting onto a new deal. Get on your phone and start making calls! I’m sure your bank will keep making money without your help.

1. There are a number of people known as ‘mortgage prisoners’ who cannot switch. This is often because their mortgages are owned by firms that don’t offer new mortgage products. MoneySavingExpert has lots more on this.

The post Remortgaging: why delaying a phone call can cost you more than a car appeared first on Monevator.

A global tracker fund takes care of all your equity diversification needs in a single investment product.

In this post, we’ll explain how to choose the best global tracker fund for you. We’ll also list our top picks from the choices on offer. 

What is a tracker fund?

A tracker fund is an investment fund that tracks an index like the S&P 500 for the US or, in the case of a global tracker, an index such as the FTSE All World. 

Your money is pooled alongside the global tracker’s many other participants. Together this capital is invested by the fund’s management team into every major stock market on the planet. 

As an investor in an index fund, you get a slice of ownership in thousands of world-class firms. As a result you buy into the prospects of entire industries, countries, and continents at a stroke. 

An index followed by a global tracker fund is essentially an international league table of the world’s leading companies, from Apple to Nvidia to Taiwanese semiconductor giant TSMC. 

Global tracker funds hold stocks ¹ to replicate their chosen index as faithfully as possible. The index meanwhile is driven by the fortunes of its constituent firms. Over the long-term, company valuations rise and fall consonant with their performance, investor sentiment, and global capital’s best estimate of their future earnings. 

Investing this way is known as index investing or passive investing. We believe it’s the best strategy for most people to choose to maximise their chances of meeting their financial goals. 

Investing giants like Warren Buffet recommend index funds. Even some ex-hedge fund managers have switched sides and urge everyday investors to pick global index trackers!

Global tracker funds – what really matters?

All-World – Most products labelled world index funds only encompass developed world countries. They skip the emerging markets, including the likes of China and India.

Such ‘world index trackers’ are less representative of the global economy. Instead look for ‘All-World’ or ‘Global’ index funds that include emerging markets.

Alternatively, if you do choose a developed world solution, you can add an emerging market index fund to your portfolio to make up the difference.

Diversification – Following on from the above, compare how many stocks your shortlist of global tracker funds includes. The more the better, because your index fund will then do a better job of representing the global stock markets that it follows.

Cost – This is the most important factor that will impact your returns and that you can control. There’s often little performance differential between global index trackers. If in doubt, pick the cheapest by Ongoing Charge Figure (OCF) / Total Expense Ratio (TER). 

Reassuringly-expensive price tags will not secure you a better global equity tracker fund. Go for cheap, vanilla flavour trackers. Don’t worry about bells and whistles. 

Don’t fret about small changes in cost, either. An OCF differential of 0.1% on £10,000 is just £10.

For example, if you had £50,000 in a fund with an OCF of 0.25% that would cost you: 

£50,000 x 0.0025 = £125 annually. 

Whereas a similar fund rocking an OCF of 0.15% would set you back £75 per year in charges.

Of course, only you can know your personal hassle threshold. Try to work out whether the impact of costs over your investing lifetime is worth switching.

Investor compensation – You’re covered for up to £85,000 if your global index fund is based in the UK. ETFs are not included. Note, investor compensation schemes only kick in if fund manager goes bust and your money disappears. Stock market losses are not covered! (Your broker is also covered by the same FSCS scheme. If the broker goes pop then ETFs and offshore index trackers are protected, so as long as your platform qualifies for the scheme.)

The index – You should look up the tracker’s index to make sure it’s truly global. If it isn’t, find out what’s missing. Check your product’s factsheet, too.

Global index fund or global ETF?

^{Disclosure: Links to platforms may be affiliate links, where we may earn a commission. This article is not personal financial advice. When investing, your capital is at risk and you may get back less than invested. With commission-free brokers other fees may apply. See terms and fees. Past performance doesn’t guarantee future results.}

ETFs and index funds are both types of index tracker. They’re both excellent ways of diversifying your investments across the globe for an amazingly low cost. 

We’re equally happy using ETFs or index funds. We include both in our best global tracker fund table below. 

The only time the fund type is a deal breaker is if:

• You want your tracker to be covered by the FSCS compensation scheme. If so, then check this list of UK-domiciled index funds, including global options. 
• Your stockbroker charges an ETF dealing fee that costs more than 1% of your typical transaction value.
• The same broker enables you to trade index funds for free. 

In the latter case, we’d invest in a global index fund in preference to the global ETF. That’s because the impact of a high dealing fee is surprisingly damaging over the long-term. 

See our cheap broker comparison table for more. Percentage-fee brokers often allow you to trade global index funds for nothing. 

Quite a few brokers also enable you to trade global equity ETFs for £0, too. Check out InvestEngine, Freetrade, Vanguard, Dodl, Prosper, and Lightyear for that option. 

Best global tracker funds – compared 

Source: Morningstar and fund provider’s data

There is very little to choose between these five global equity trackers:

• SPDR’s All Country World Index tracker is the cheapest. Hence it tops the table.
• The SPDR and iShares ETF follow MSCI indexes whereas the others follow a FTSE index. The indexes vary somewhat in country composition but have performed identically over the past decade.
• Vanguard’s Global All Cap index fund has about 6% small cap exposure. It’s therefore more diversified than the rest.  

The reality is these shades of grey haven’t made much difference to results over the longer term. More on that in a moment.

Ch-ch-changes…

There are two relatively new entrants into the global tracker fund market to keep an eye on. They’re low cost but they haven’t had time to build a track record yet:

• Amundi Prime All Country World ETF – OCF 0.07% (The cheapest global tracker fund available.)
• Invesco FTSE All World ETF – OCF 0.15%

I’ll also throw two other choices into the pot because they do something a little different:

• Fidelity Allocator World Fund W – OCF 0.2%
• Vanguard LifeStrategy 100 fund – OCF 0.2%

Vanguard’s LifeStrategy funds include a UK equity bias of around 20%. That compares to a 3% UK allocation for the true global index trackers in the table. You could choose LifeStrategy 100 if home bias suits your situation. Go for LifeStrategy 20-80 if you want an all-in-one fund that includes government bonds. 

(Vanguard has also recently launched a ‘LifeStrategy Global’ range. These funds are the same deal as the regular LifeStrategy range, minus the home bias.)

The Fidelity fund is actively managed. It features a REIT exposure and small cap allocation of about 10%. 

Both are funds-of-funds. They manage their asset allocation by holding other index trackers instead of trading the shares of listed firms. 

Here’s a useful piece on how to compare index trackers.

Best global tracker funds – results check 

Source: Trustnet’s Multi-plot Charting tool

I’m most interested in the 10-year annualised (nominal) returns for the global tracker selection above because that’s the longest comparison period we have for most of the funds in the mix.

I’ve underlined the 10-year returns of the MSCI ACWI and FTSE All-World indices in magenta. A well-functioning passive fund should perform in line with its benchmark – which this selection does.

In fact, most trackers should lag their index because the fund pays fees. The index doesn’t bear that cost. (Intriguingly, only the iShares ETF currently trails its index. Whereas three of the top four were lagging as recently as February 2026.)

In any event, there’s no need to pay attention to performance differentials that lie within a few tenths of a percentage point.

A tracker may eke out a small lead for a while, but it’s usually temporary. For example, the HSBC All-World fund was ahead by a nose over the last couple of years. But the fund has been reeled in by the others in just the past month.

Hence it’s just not worth sweating any marginal differences. They can quickly be reversed by short-term market moves.

Stress-free investing

If you’re starting from scratch then by all means choose the leading fund of the moment.

But there’s no need to switch out of the other top five funds because of the result in the table.

Index trackers are typically cookie-cutter products. Mostly the results just demonstrate our top five all work fine. They are practically interchangeable.

We’re not checking performance to crown the one, true, best global tracker fund.

With me-too products, you don’t have to over-optimise. Any candidate from a field of well-matched rivals will probably be good enough.

Our performance check simply ensures that nothing on our shortlist is broken, or isn’t what we think it is.

A world of difference

Here’s a few other things to note.

Fund sizes – All five index trackers in our top table have hundreds of millions in assets under management (AUM). Efficiencies of scale typically kick in above £100 million. Beyond that threshold, size is not a big deal. The iShares ETF is three times the size of the SPDR ETF, but its performance is neck-and-neck over ten years.

Fixed income – The trackers in our table are purely equity funds. Owning additional high-quality government bonds is crucial to help you not to freak out during a stock market crash.

Check out our best bond fund choices to find your fixed-income Venus for your equity Mars.

Understanding how to build your asset allocation will help you work out how much you need to put into such diversifying defensive assets.

Income versus accumulation – All of our best global index tracker picks come in both Inc and Acc flavours, except the iShares and SPDR ETFs. They are only available as accumulating funds.

World and World ex-UK – I excluded these trackers, because it makes no sense to only include the Developed World, or to skip the UK when you’re trying to diversify across the whole world.

K.I.S.S.

The beauty of the single global equity tracker strategy is its simplicity.

Yes, you could shave away a little cost by building a similar portfolio from separate regional trackers.

But is it worth the aggro in time and dealing fees? And can you trust yourself to stick to the global market’s verdict? Or will you justify trimming back on Japan or the US or wherever because you can apparently spot a bubble that everyone else has missed?

Fill your boots if you psychologically need the control. But know that you don’t have to.

Nobody can predict which strategy will win over your investment lifetime. But putting a global tracker fund at the core of your asset allocation is a rational choice in an increasingly insane world.

Take it steady,

The Accumulator

1. Or an equivalent financial product.

The post Best global tracker funds – how to choose appeared first on Monevator.

What caught my eye this week.

Considering the high hurdle that politicians and business leaders have set themselves for something to be considered a sacking offence, I was surprised to see the boss of National Savings & Investments (NS&I) resign this week.

Of course, the NS&I FUBAR was a rough experience for the 37,500 people affected. NS&I’s mistakes saw bereaved families facing delays accessing their relatives’ Premium Bonds with a total value of up to £476m.

To give just one example from a BBC report:

Tracy McGuire-Brown from Newbury in Berkshire […] took six years to claim £2,000 in premium bonds her late father had left in his will.

The 61-year-old former care home manager says she “cannot describe how upsetting and frustrating” it was to deal with NS&I, and that she had to send in her father’s will and other original documents at her own expense.

“It was the most awful, awful experience,” she says.

No doubt – and not what anyone wants to deal with in the wake of the death of a loved one.

However, NS&I has more than 24 million customers holding £240bn with the institution, so the number affected is relatively small. According to Which the problems were caused by administrative failures – bad, certainly, but not malicious. The long delay between problems emerging and NS&I coming clean is problematic, but again the scale of the operation mitigates this to some extent.

With all that said – and, again, not to make light of having to fight to get your own money back – I think the real reason boss Dax Harkins had to go was because NS&I is held to a higher standard than a typical High Street bank, on the basis of its 100% government backing.

Trust buster

I’ve often recommended NS&I savings or Premium Bonds to fretful – but essentially financially uninterested – friends and relatives looking for somewhere safe to put their cash. Especially after the financial crisis.

No worries about bank runs with NS&I, or Financial Services Compensation Scheme limits, or your savings somehow getting muddled up in riskier lending. Just okay interest rates, the infinitesimal chance to win big with ERNIE, and a recommendation made in the same vein as nobody getting fired for buying IBM.

Also, faith in NS&I’s systems underwrites the Premium Bond draw.

There are already conspiracies about which Bonds win and who gets what prizes. NS&I can do without incompetence creeping into the mix, too.

Further reading:

• A terse apology from National Savings & Investments – NS&I
• NS&I boss replaced as savers left waiting for millions of pounds – BBC
• What caused the missing NS&I savings, and what you should do – Guardian
• Another take on the scandal and next steps if you’re affected – Which
• NS&I will have to pay compensation in some cases, say ministers – This Is Money

Have a great weekend.

From Monevator

Commodities are working – Monevator

The natural yield model portfolio wheels are turning – Monevator [Members]

From the archive-ator: A plan to be financially independent in ten years – Monevator

News

OECD says UK will be hardest hit by Iran war, sees 4% inflation – CNBC

World faces ‘stark and deep recession’, says BlackRock boss – This Is Money

Temporary petrol shortages possible at some pumps, warns ASDA – Guardian

How Trump and the oil price move in sync [Charts] – BBC

Reminder: the state pension age rises in April – Which

Buying UK housing most affordable since 2015 on price-to-earnings basis… – ONS

…as London house prices drop again… – City AM

…but rents are at an all-time high relative to incomes – Sky

Final candidates for seven new towns named – BBC

SpaceX’s mooted IPO valuation is in another orbit – Sherwood

Government defends landlord tax hikes as ‘fairer’ system – Property 118

FCA launches later life mortgage [a.k.a. equity release] study – Mortgage Strategy

Who ate all China’s stock market returns? [Paywall] – FT

Products and services

^{Disclosure: Links to platforms may be affiliate links, where we may earn a commission. This article is not personal financial advice. When investing, your capital is at risk and you may get back less than invested. With commission-free brokers other fees may apply. See terms and fees. Past performance doesn’t guarantee future results.}

The savings accounts that will pay you up to 5% – Which

How to swap houses for your holidays – Guardian

Don’t rely on AI to find you the best savings deal – Which

Get up to £3,000 cashback when you open or switch to an Interactive Investor SIPP. Terms and fees apply, affiliate link – Interactive Investor

HSBC, Barclays, Nationwide, and Halifax hike mortgage costs – Yahoo Finance

Five-year mortgages now cheaper than two-year fixes again – Mortgage Strategy

Fixed-rate mortgages go above 5.5%, but 4% trackers are available – This Is Money

Get up to £1,500 cashback when you transfer your cash and/or investments to Charles Stanley Direct through this affiliate link. Terms apply – Charles Stanley

Natwest switch offer: £150, or £250 for Premier account – Be Clever With Your Cash

What are passkeys and why should you use them for security? – Oblivious Investor

The best and worst family deals at major UK attractions – Be Clever With Your Cash

Loft-style apartments for sale, in pictures – Guardian

Comment and opinion

Could the triple-lock be scrapped, and should it be? – This Is Money

Index funds work – Money Changes Everything

Echoes of history: what the oil shock means for your money [Paywall] – FT

Seven lessons from ‘enoughfluencers’ on how to live a simpler, happier life – Guardian

Yes you can beat the market by avoiding its worst days. But you won’t – Morningstar

Why are young people taking so many unwise financial risks? – Bloomberg Advisor Perspectives

Safe until crisis: what 300 years of wars reveals about government debt – CEPR

Your financial past isn’t true. Neither is your future – The Net Worthwhile Weekly

The quiet transformations that separate investors from stewards – Bogumil Baranowski

How to compare well – Mr Stingy

The woes of managing money for a friend or relative – Financial Samurai

Hendrik Bessembinder has updated his influential stock return study [Research] – SSRN

Naughty corner: Active antics

The big problem with UK investment trusts – City AM

VCTs brace for record season after ‘bonkers’ tax relief cut – This Is Money

The reality of setting up as a solo investment advisor – Flyover Stocks

Ex-US markets look a good bet for value investors… – Verdad

…as Verdad’s founder Dan Rasmussen warns on private equity and more – Arena

In Elon Musk’s mind, SpaceX and Tesla have already merged – Sherwood

Tetra Pak: the shape of innovation – Quartr

Kindle book bargains

The End of Reality by Jonathan Taplin – £0.99 on Kindle

Boomerang by Michael Lewis – £0.99 on Kindle

Money Men by Dan McCrum – £0.99 on Kindle

Economica by Victoria Bateman – £0.99 on Kindle

Or pick up one of the all-time great investing classics – Monevator shop

Environmental factors

Britain sets new wind power generation record – RE News

Green energy enquiries surge as households fear price spike – This Is Money

Plug-in solar panels to become legal in the UK – Which

Evan Davis: heat pumps work for me – BBC

Earth’s climate increasingly out of balance – World Meteorological Organisation

The carbon burden of US companies – Klement on Investing

An unstoppable mushroom is tearing through North American forests – BBC

Robot overlord roundup

So long, Sora – Spyglass

Human musicians are doomed – Klement on Investing

Inside China’s robotics revolution – Guardian

There will be no permanent underclass – Of Dollars and Data

Not at the dinner table

The world’s policeman is on the take – New York Times [h/t Abnormal Returns]

Treason in the futures market – Paul Krugman

There isn’t always a ‘long arc’ of morality – Noahpinion

Democracy watchdog finds Trump aiming for dictatorship – Guardian

There’s an information void at the heart of the Iran war – Bloomberg

The voter fraud fraud – The Bulwark

Off our beat

Cheap drones are reshaping the war in the sky – Reuters

Five years of lessons from running a bookstore – Ryan Holiday

“I escaped North Korea with my mum. But…” – BBC

The clock in our genes – Aeon

Scientists identify a speech trait that foreshadows cognitive decline – Science Alert

The indirect – and sometimes surprising – benefits of vaccines – Stat

Google search tips and hacks – Card Catalog

And finally…

“Human beings have a remarkable ability to accept the abnormal and make it normal.”
– Andy Weir, Project Hail Mary

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Remember my natural yield model portfolio that I kicked off in May last year? I know that many of you do, because you keep emailing me about it!

The post The natural yield model portfolio wheels are turning [Members] appeared first on Monevator.

Is it me or are the 1970s back? Apparently Claudia Winkleman was spotted in flares, plus there’s an oil crisis inbound. (You might have noticed?)

Personally I can’t wait to queue around the block for petrol and use candles for lighting again. 

But while it’s a bad time to be the owner of an ICE ¹ car – or a leader of Iran – it’s an excellent time to be a commodities investor. 

The vertical take-off vehicle in the chart below is the sight of a natural gas ETC ² going up like an interceptor – once the missiles started flying. See the light blue line:

Chart from justETF. March 2026. justETF charts show nominal total returns (GBP).

The gas futures tracker is 92% to the good since 2 March (the first day of trading after the war began).

It’s as if people think bombing gas fields is gonna put up the cost of energy or something.

Whizzing along at a slightly lower altitude is Wisdom Tree’s Brent Crude Oil ETC (yellow line, 54% gain).

Finally, UC15 – my fave broad commodities ETF – flies under the radar with an 11% gain (green line).

Run for cover

The next chart contrasts the response of equities, gold, bonds, money market, and commodities to the current crisis:

Yes, every other asset class is retreating like a Dubai-domiciled influencer bar docile cash (orange blip) and the aforementioned commodities (the investment that loves it when physical stuff gets scarce). 

But don’t worry, this is not a “Commodities Ra-Ra!” post. 

The point is that DIY investors are naturally sceptical about commodities. The asset class is sickeningly volatile and many recall how it fell into a doom spiral after the Global Financial Crisis. 

Yet the counterpoint is that commodities are often upstanding – and sometimes outstanding – when other asset classes hide under the table. 

Especially during the supply shock crises that wrack the world periodically. Which – unless Trump steps off his golden escalator soon – is exactly what the current contretemps could trigger. 

Hopefully sanity will prevail. But it can take a while before the hard-of-sanity see sense.

That’s why commodities deserve another look. Especially given how other assets struggle to cope with highly inflationary conditions. Gold may perform but it’s a highly unreliable bedfellow (as its current 12% drop-off since 2 March is currently reminding us…)

Commodities: the good, the bad, and the downright ugly

I’m not a stooge in the pocket of ‘Big Raw Materials’ who pay me in bushels of wheat for every new convert. Honest!

What follows is intended as a relatively quick and digestible account of the reasons why you might want to hold commodities as a strategic diversifier. It includes reasons why you might skip it as well.

Just so you know where I’m coming from, I don’t advocate dipping in and out of Brent Crude ETCs depending on how histrionic Pete Hegseth appears today. 

However, I do hold a broad commodities ETF (Ticker: UC15) as a portfolio diversifier and bulwark against inflationary shocks. 

BCOM again

Now, about that commodities bear market…

The commodities index I benchmark against (BCOM) has still not recovered the market high it achieved in June 2008. 

From that perspective, the asset class has spent almost 18 years underwater! That’s absolutely hideous if you were sucked in by the Noughties’ run-up in commodities. (An ascent often attributed to the rapid growth of China and other emerging economies at the time.) 

However commodities look perfectly respectable from other starting points. 

For instance, here’s the annualised returns over the past ten years for the main asset class ETFs I charted earlier in the article:

Nominal annualised total returns (GBP) from justETF, 20 March 2016-20 March 2026. I’ve replaced iShares Global Government Bond ETF (IGLH) with XGSG because IGLH does not have a ten year track record. Both are GBP hedged.

On this view, commodities don’t look so bad. In fact, they’ve done extraordinarily well during a period in which gold and equities have been blinding. 

Moreover, they’ve produced a great result for a diversifying asset. There’s not much point holding raw materials to deflect rogue waves of inflation if it’s a deadweight the rest of the time. 

(Reminder: for real returns, subtract average UK inflation of about 3.5% for the period.) 

Commodities for the long run

The long-term real return of broad commodities stacks up nicely, too:

Data from AQR ³, Summerhaven ⁴, BCOM TR, MSCI, Before the Cult of Equity ⁵, A Century of UK Economic Trends ⁶, Robert Shiller, The Big Bang ⁷, Bank of England, and ONS. March 2026. Monevator sourced returns in this article are inflation-adjusted annualised total returns (GBP).

World equities index – Pre-1970 World equities monthly returns are not available in the public domain. To facilitate long-term comparisons, I’ve used market-cap weighted UK and US monthly returns to stand in for World equities from 1900 to 1970. The MSCI World equities index covers the period from 1970 until the present day. The UK / US market cap varied from approximately 55% to 84% of World equities up to 1970.

The long-run view shows that commodities are not a basket case. Indeed, their average return is more than fine (and compares favourably with other defensive diversifiers):

• Broad commodities (blue line in chart above): 4.6% annualised real total return (GBP)
• World equities (red line): 5.9% annualised real total return (GBP)

My chart annotations spotlight commodities’ handy habit of peaking when inflation runs amok. Unsurprisingly really, because they’re the feedstock of the price index itself.

As such, the historical record shows that raw materials are the asset class most likely to beat inflation when it’s eating your purchasing power alive.

Two caveats though.

Firstly there are some enormous bears lurking in the commodities return undergrowth. We’ll wince at those shortly.

Secondly, the chart’s biggest commodity booms are associated with the early Twentieth Century industrialisation of the US (see 1900 to 1909 on the chart) and the double-hit of post-war inflation and reconstruction (1945 to 1950).

If you don’t think the transition to a decarbonised economy built around the electric tech stack will have quite the same impact, then we should discount commodities’ long-run average growth rate.

For example, fund manager Research Affiliates’ offers 3.1% as its 10-year real expected GBP return for commodities.

Either way, on balance I think it’s reasonable to believe commodities can make a positive contribution to the growth of a diversified portfolio.

Material gain

For my money, the real win isn’t the future return of commodities. It’s the damage limitation role they can play when equity performance is grim.

The next chart contrasts World equities and commodities returns during the biggest stock market routs of the past 126 years:

On average, commodities outperformed equities by 46.1% per bear. Remember that’s an inflation-adjusted return, too.

As you can see, commodities didn’t always produce a positive return. However, they did deliver a better return than equities. Every time.

The table below offers a quick summary of the action above:

Diversification score card

Pretty compelling, eh? The table is telling us that commodities always improved portfolio performance when investors desperately needed a life belt to cling onto.

Indeed I think I should write up a post repeating this score card for the other key portfolio diversifiers available to us – and that can also be tested against a diverse range of economic conditions. Namely, cash / money market funds, government bonds, and gold.

Without checking, however, I bet the others will struggle to do as well as commodities. Simply because runaway inflation is the spark most likely to torch UK investors’ portfolios.

This is at odds with the US downside experience, which is dominated by demand-led recessions like the Great Depression.

That’s partly why commodities have been given short shrift. They don’t thrive when demand collapses.

You can see in the chart above that the clamour for copper and cows evaporates during Big League liquidity crises. Witness commodities’ negative returns booked against the Global Financial Crisis, the Japanese asset bubble implosion, and the slump-daddy of them all, the Great Depression.

Thankfully, government bonds usually ride to the rescue during those times of darkness.

But commodities were deemed unnecessary when DIY investing took off because memories of rampant inflation had faded. And Americans hadn’t suffered purchasing power cuts on the scale that scarred previous generations of Brits either.

Totally oresome

The next chart gives you the gory details on how often commodities have stepped up when equities have fallen down:

The red ravines represent the occasions that equities fell from their previous high – including the death plunges we saw in the previous chart.

The icy peaks show the subsequent rolling one-year commodity real returns.

Blue swells that rise above the 0% line show commodities actively counterbalancing equity drops with a positive return over the next 12-months.

But if the blue line tunnels down, then it exacerbates the situation if it bores through the red floor.

Otherwise, negative commodity returns reduce the drag factor so long as the blue losses don’t exceed the red.

The higher and more frequently the blue waves rise above the red depths, the better.

Once again, this is a sterling result, but the chart also warns us that commodities don’t always hedge your losses.

The hard stuff

As grizzled commodities investors know, this is an asset class that can batter you with devastating combos of negative returns.

The next chart retells the commodities growth story, but it highlights the warts ‘n’ all:

Obviously the angry red areas are the down years – or decades.

Not so bad? Not so fast!

The chart is based off softie nominal prices, because that best represents our lived experience as investors.

However, the next chart shows the real deal – because it’s inflation-adjusted returns that put food on the table:

Oh my! This is the ugly I mentioned earlier.

By this light, the history of commodities returns is dominated by nearly four double lost-decades. ⁸

In other words, commodities sunk deep underwater for around 80 of the last 126 years. So there’s that.

Shovel it

If the boom and bust nature of commodities puts you off for life, I don’t blame you.

Reader, I invested. Not because I love pain but because commodities can bulk up when equities and bonds wane.

My target asset allocation is 10%. However I only bought 5% initially, my plan being to take advantage of raw materials’ inherent volatility in the future.

That is:

• I’ll buy more when my commodity ETF plummets.
• I’ll sell when the ETF’s price rockets.

Hopefully that rebalancing schedule will enable me to turn a profit on my commodities exposure. Or at least recover more rapidly when the next equities’ bear strikes.

Super psyched

Incidentally, the mighty leg-ups on the commodities’ growth chart led to the development of the commodities ‘super-cycle’ theory.

The theory posits that commodities go on a tear during periodic transformations of the world economy. Whereas the subsequent slumps are the product of over-investment in solving commodity bottlenecks.

If that pattern holds then we’re still on the upswing from the depths of the last commodities’ depression. It began when easy money dried up during the Global Financial Crisis.

It’s a macroeconomic story arc that could help explain the excellent 10-year returns we saw for commodities earlier, and Research Affiliates’ chipper 10-year expected returns forecast too.

But what matters to me is that there’s something in my portfolio that reacts to inflation like Popeye on spinach.

When that happens I’ll sell up and buy breathing space for my equities to recover.

Take it steady,

The Accumulator

P.S. For more on commodities, check out our five-part series:

• Part one explained how commodities investing works
• Part two covered commodities’ long-run returns
• Part three examined whether commodities enhanced portfolio returns
• Part four investigated whether commodities really are a good inflation hedge for UK investors. [Members post]
• Part five delved into my ‘best commodities ETF‘ picks

P.P.S. “What follows is intended as a relatively quick and digestible account…” Yes, I failed. Again.

1. Internal combustion engine
2. Exchange Traded Commodity fund
3. Levine, Ooi, Richardson, Sasseville. 2018. “Commodities for the Long Run.” FAJ.
4. Bhardwaj, Janardanan G, Rajkumar, Geert Rouwenhorst K. 2020. “The First Commodity Futures Index of 1933.” Journal of Commodity Markets. 2020.
5. Campbell G, Grossman R, Turner JD. 2021. “Before the cult of equity: the British stock market, 1829–1929.” European Review of Economic History. 25. 10.1093/ereh/heab003.
6. Chadha J, Rincon-Aznar A, Srinivasan S, Thomas R. “A Century of UK Economic Trends.” ESCoE, NIESR and Bank of England.
7. Kuvshinov D, Zimmermann K. 2021. “The Big Bang: Stock Market Capitalization in the Long Run.” Journal of Financial Economics, Forthcoming.
8. During my research I discovered that a ‘vicennium’ is the noun for 20 year spans. But I’m relegating this knowledge to the footnotes, because anyone who bandies around words like vicennium needs to have a word with themselves.

The post Commodities are working appeared first on Monevator.

What caught my eye this week.

Well he’s achieved what the simultaneous fears of an AI bubble and the fear that AI would take all our jobs couldn’t quite manage.

For a moment yesterday, US President Donald Trump had sent the Nasdaq market into correction territory:

Of course it’s true that markets – especially US markets – have been cruising for a bruising for ages.

But still, we haven’t seen a decline like this since Trump last took his agenda to the global stage, when he was throwing around (figurative) bombshells back in April 2025 on his ill-fated Liberation Day.

Most of the tariff hullabaloo has since been unwound, either by Trump’s own backpedaling or the intervention of the US courts. And the final bill for his economic illiteracy has largely been paid by the US taxpayer, in the form of US firms and consumers.

It would be nice to think the Iran conflict will end the same way, and soon.

It’s possible. Despite Trump having said hours earlier that he wasn’t interested in a ceasefire with Iran, I woke to news that some tweet or segment from a Fox News pundit now had him pondering winding down his latest campaign.

Top Trump

We’ll have to see how Trump feels tomorrow. Nothing else will matter.

US politicians have been supine while enabling Trump’s second term antics – which is why he so swiftly went from abducting a head of state to at least taking the cellophane off the manual marked World War 3 – and he doesn’t appear bothered about the average US voter, either.

So despite the war cementing Trump’s status as the most unpopular president of all-time, so far he’s not for TACO-ing.

And yet the bombing potentially going into a fourth week is already surprising, given that the White House war aims appear to have been met:

• The casual decapitation of another sovereign regime
• Plenty of exciting new downloadable content for fans
• Nobody moaning – or reading – about ICE shooting US citizens anymore

But what about the ‘complete obliteration’ of Iran’s capacity to develop nuclear weapons, you say?

Don’t be silly. Trump assured us he’d already done that last year.

No doubt he’ll completely obliterate it again next year if he needs to.

The sick man of the G7

Falling stock markets are one thing, and arguably not even unwelcome. They come with the territory.

The unmooring of the world’s hegemonic superpower is another, more frightening thing. At the far end of that storyline is a long global conflict just one mistake away from the four-minute warning.

And slap-bang in the middle is good old Blighty, always ready these days to get the worst of it:

Other consequences that even those who complain that ‘politics’ – if that is what we’re witnessing – has no place on an investing website like Monevator will concede are relevant include a near-50% rise in the oil price to $100, and a direct hit on UK households:

• • Energy bills could hit almost £2,000 a year… – Guardian
  • …as gas prices reach their highest level for three years – This Is Money

There’s little that the UK government can do in response. Not least because Rachel Reeves has bills to pay of her own. Any breathing room from lower borrowing costs has again gone for now:

If yields stay up here for long they will kibosh any economic recovery. They’ve probably already done for a spring bounce in our beleaguered housing market.

Hence the UK economy will continue to languish – at least £100bn a year smaller than it would have been if we had remained in the EU, and thus £40bn short annually of the tax receipts that might have helped make things better.

But I won’t shoot more fish in the Brexit barrel today.

Indeed one can almost look fondly on our own poundshop populist-in-chief, given that Nigel Farage can apparently satisfy his own urges for crass showmanship and self-interest by charging £100 a pop to meet the whims of white supremacists on the Cameo app, when the alternative is blowing up the Middle East.

Falling down

Unlike our own witless foray into national self-harm though, something good could actually come out of this unnecessary conflagration with Iran.

Were the regime to fall and a version of democracy to take hold, I’d be the first to cheer Iran rejoining modernity. A bigger Dubai with better museums and restaurants, or more seriously a proper grown-up country with a global standing befitting its size, resources, and storied history.

However that end does not justify these means.

Veteran anti-American leftists must look back on President George W. Bush’s laborious efforts to establish a coalition and a cause for the Iraq war as fantastical. Something more akin to the Council of Elrond in The Lord of the Rings compared to this president, who sets the Middle-East ablaze one week then mutters about ‘taking’ Cuba the next.

But maybe you’re one of those supposedly tough-minded realists who thinks we’re just seeing how the world was always run, now President Trump has bravely pulled down the curtain?

Firstly, you’re wrong. This isn’t how the Western world was run for the past 80 years. (Granted it’s how it’s sometimes run in banana republics, or under African tyrants).

But secondly, there’s nothing tough about smashing stuff up for no good purpose other than to make a lot of noise to please your base and satisfy your ego.

Hard things require hard work, as well as holding your tongue and sometimes your power.

As Canadian PM Mark Carney eloquently put it at Davos in February:

For decades, countries like Canada prospered under what we called the rules-based international order.

We joined its institutions, we praised its principles, we benefited from its predictability. And because of that, we could pursue values-based foreign policies under its protection.

We knew the story of the international rules-based order was partially false, that the strongest would exempt themselves when convenient, that trade rules were enforced asymmetrically. And we knew that international law applied with varying rigour depending on the identity of the accused or the victim.

This fiction was useful, and American hegemony, in particular, helped provide public goods, open sea lanes, a stable financial system, collective security and support for frameworks for resolving disputes.

The rules-based order that some now scorn is exactly why the West enjoyed many decades of relative peace and prosperity.

But it’s also why, for instance, China was able to pull a billion people out of poverty, and why – and always most importantly and easiest forgotten – why the post-nuclear horror film Threads is still a work of fiction, as opposed to what happened last Tuesday.

Won’t anyone think of the despots?!

You might say the rules-based order was a lie that didn’t give Vladimir Putin or Kim Jong Un – let alone Saddam Hussein or any number of Central American dictators – a fair shake.

Fair enough, but at least be clear who you’re advocating for.

Similarly, you might find it refreshing to hear the leader of a nuclear superpower calling his NATO allies cowards for not diving into the latest mid-season plot twist for the Trump White House.

But don’t complain when every other country starts pointing nuclear missiles at their neighbours as a consequence.

As Janan Ganesh points out in the FT [Paywall] this week:

As of last month, there is for the first time in over half a century no binding agreement to limit nuclear arms between America and Russia, which have the world’s two largest arsenals.

What is this?

A wave of recklessness? Perhaps, but also a natural response to events.

If the worst that results from this circus is higher prices at US gas stations and another 20% down on the S&P 500 then we will have gotten off lightly.

But I’m inclined to worry that the unravelling of the post-WWII Western consensus will – eventually – come with a higher and bloodier bill.

Of course the United States is far from the first empire to grow fat, hubristic, and ignorant at the height of its power.

But it is the first to be run by a former TV game show host.

No wonder Wheel of Fortune, Jeopardy, and The Price Is Right seem to be the closest we have to a doctrine in Washington these days.

Housekeeping: email issues

It seems more Monevator emails have been going into spam and junk folders than even my critics’ complaints about my forays into politics would warrant.

The issue may be that I’ve been using URL shorteners to tidy up lengthy link addresses. So I’ll be cutting back on that.

Anyway if you’re reading this article on the website but you’re also an email subscriber who hasn’t seen an email for a while then please do double-check. Mark any Monevator emails you find in spam as ‘not spam’.

We’ve been doing three emails a week for many years now. That’s how many you should get!

Related, several dozen Monevator members are not receiving member posts over email, so they must be reading them on the site. (Via the growing Mavens and Moguls archives perhaps).

If that’s how you want it then fine. But if you’re a member and you’re missing the emails, then please make sure you’re subscribed to get all Monevator emails.

Re-subscribe if need be. (And again, look out for the confirmation email getting lost in spam…)

If that doesn’t work then please do drop me a line.

It’s our lovely Monevator members who keep the lights on around here these days, and I want you to read us exactly how best suits you.

Have a great weekend!

From Monevator

Year 3 withdrawal from the No Cat Food portfolio – Monevator [Members]

The wild last year of a linker – Monevator

From the archive-ator: Why commodities belong in your portfolio – Monevator

News

BOE vote 9-0 to hold interest rates steady on Iran war risks – Reuters via MSN

IT failure locked out Hargreaves Lansdown’s customers – BBC

UK housing costs rose 41% in five years, for owners and renters – Guardian

Banks keep £100 contactless payments limit despite new powers – City AM

Stopping gas dictating UK energy price could cut bills by £200, study finds – Guardian

Revolut to IPO above $100bn, says former licence boss – City AM

Comedian Sean Hughes’ £4m estate finally given to Shelter – Independent

Five-Year Annualized Value Premium (Jan. 2021 – Dec. 2025)

Value is back – Verdad

Products and services

^{Disclosure: Links to platforms may be affiliate links, where we may earn a commission. This article is not personal financial advice. When investing, your capital is at risk and you may get back less than invested. With commission-free brokers other fees may apply. See terms and fees. Past performance doesn’t guarantee future results.}

Sub-4% mortgage rates vanish as banks pull deals – Yahoo Finance

Typical new mortgage costs up £788 a year in a fortnight – BBC

What next for mortgages and how long should you fix for? – This Is Money

Average ‘shelf life’ of a mortgage is now just two weeks – Guardian

Get up to £1,500 cashback when you transfer your cash and/or investments to Charles Stanley Direct through this affiliate link. Terms apply – Charles Stanley

Eight expensive mistakes to avoid when buying life insurance – Which

Santander switch offer: £200 + Amazon gift card – Be Clever With Your Cash

HMRC has a new ‘Tax Confident’ educational portal – GOV.UK

Get up to £3,000 cashback when you open or switch to an Interactive Investor SIPP. Terms and fees apply, affiliate link – Interactive Investor

How does shared ownership work? – Be Clever With Your Cash

Shrinkflation takes a bite out of Easter eggs – Guardian

Making Tax Digital myths debunked – Which

Homes for sale with uplifting views, in pictures – Guardian

Comment and opinion

Side hustles and the UK tax system – Guardian

Five ways to avoid triggering tax traps – Which

Why private school isn’t worth the cost – Of Dollars and Data

How to ‘peakspan’ your retirement – A Teachable Moment

When the benchmark becomes a bet – Capital Allocators

Private credit: for most, an asset-liability mismatch – A.W.O.C.S.

Here’s why you are constantly fighting off scammers [Podcast] – Freakonomics

Emotional yields of collectibles [Research] – Elroy Dimson et al via SSRN

Naughty corner: Active antics

An unsustainable bubble is growing inside fintech – Forbes

Waiting for the IPO wave – Arcadian

Saba forces the wind-up of Edinburgh Worldwide – AIC

Ten growth stocks to buy for the long-term – Morningstar

Hyperscalers and hard hats – Sherwood

The biggest active funds picked the right stocks, then fussed – Flyover Stocks

AI is disruptive, but it isn’t a moat killer – Morningstar

Venture capital doesn’t exist – Investing 101

Kindle book bargains

The End of Reality by Jonathan Taplin – £0.99 on Kindle

Boomerang by Michael Lewis – £0.99 on Kindle

Money Men by Dan McCrum – £0.99 on Kindle

Economica by Victoria Bateman – £0.99 on Kindle

Or pick up one of the all-time great investing classics – Monevator shop

Environmental factors

Researchers turn waste plastic into vinegar – The Conversation

The plastic detox – Guardian

Trawling ban off Sussex coast sparks marine recovery – BBC

England must allot 7% of land to nature and renewables to hit targets – Guardian

The moment one polar bear took on a walrus herd – BBC

Robot overlord roundup

The 12x bet on AI – Tom Tunguz

A petri dish of human brain cells is playing Doom – Guardian

Judge issues AI warning as after landlord uses fake law defence – BBC

How much computing power is in a data centre? – Construction Physics

Parents think they know how kids use AI. They don’t – BBC

Will AI replace financial advisors? – A Wealth of Common Sense

Agents over bubbles – Stratechery

Not at the dinner table

Why Labour’s Brexit focus has shifted from Leavers to Remainers – BBC

Sadiq Khan cites £30bn GDP Brexit hit to London – Standard

Inside the White House plan to sell the Iran war online – Politico

Green leader Polanski wants to back the ‘caring majority’ – Green Party

US judge orders Trump administration to reopen Voice of America – BBC

A whiff of stagflation – Paul Krugman

You can just do things – N+1

Off our beat

Why has this meningitis outbreak spread so fast? – BBC

RIP my profession (and probably yours too) – Hello, Mortal

Ukraine is hanging anti-drone nets over cities – NPR

Why Nigeria is burying its history under a mountain in Svalbard – Guardian

From Hormuz to Malacca, global trade relies on five waterways – The Conversation

One situation after another – The Atlantic [h/t Abnormal Returns]

The Cassandra and The Machine – New Atlantis

In favour of enjoying things on purpose – Raptitude

And finally…

“It is easier to stimulate asset prices then it is to stimulate the economy.”
– Terry Smith, Investing for Growth

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The post Weekend reading: Dire Straits appeared first on Monevator.

A conventional gilt is a reliable fellow. He is quite predictable right through to maturity, with yields drifting up or down broadly in line with his siblings.

But his wayward cousin the linker has no intention of going quietly. With less than a year to live, index-linked gilts seem to throw off the shackles of convention and lose all inhibition. Yields surge and plunge quite alarmingly.

What is the cause of such unseemly behaviour? And can investors benefit from it?

Linkers gone wild

Here’s the yield for the 22/03/2026 index-linked gilt for the year to maturity (blue), compared with that of the 2027 and 2028 linkers:

(All yield data is from Tradeweb .)

These three linkers start the year with similar real yields. But between June and July – about nine months from maturity – the 2026 yield suddenly jumps higher. The others barely move.

Linker yields reported on Tradeweb (and elsewhere) exclude the effect of inflation. They show the real yield – what your return would be if inflation was zero.

The actual return will be the real yield above plus RPI (to be replaced by CPIH in 2030). You only know this retrospectively, when all the relevant inflation reports are published by the ONS.

An opportunity?

You might be forgiven for thinking that this wild surge in yield represented an opportunity for a few months’ higher returns on some idle cash.

At least I hope you could be forgiven. Because that was the mistake I made.

But before we look at why there aren’t actually easy extra returns here, it’s worth illustrating this late-stage yield movement is not unusual.

The 2024 linker

The last index-linked gilt to mature before 2026 was the 22/03/2024 issue. It also had a 0.125% coupon.

Here’s the plot of its yield compared to its two nearest peers in the run up to maturity:

Again, the yields clearly diverge about nine months from maturity.

The 2022 linker

Just for fun, here’s the wild last ride of the linker maturing on 22/11/2022, mapped against its nearest peers:

This time there’s a slump in yield, rather than a spike. But more notable are the astonishing negative yields.

But let’s leave the madness of a post-pandemic inflation spike and a bonkers mini-budget and return to that late surge in yield on the 2026 linker.

Inflation

Inflation clearly has a central part to play in index-linked gilt pricing.

Look at annual RPI change below. Nothing seems to jump out that would account for the sudden change in yield on the 2026 linker:

But the value of index linked gilts does not increase with annual inflation. It increases (and sometimes decreases) with the much more volatile monthly changes in the index:

Advance warning

Because (most) linkers use a three-month RPI lag — and inflation data is published with a few weeks delay — investors know part of the future indexation in advance (as laid out in the DMO rules).

For example, the RPI figure for January 2026 was published on 18 February. That value feeds into the index ratio applied to linkers during March. So on 18 February, investors already know the inflation uplift that will be applied to the bond over the next six weeks.

When a linker has a few years to run, this advance warning doesn’t tell you much about the likely overall return. But as you run down the final months towards maturity, it most certainly does.

Impact on yield

As a linker approaches maturity, a growing proportion of the remaining inflation uplift is already determined by published RPI data that has yet to be fed into the index ratio applied to linkers.

Once that future uplift is known, the bond’s price adjusts to reflect it, which shows up as a move in the quoted real yield.

When only a few months remain before maturity, even small changes in the expected total return can translate into large swings when expressed as an annualised yield.

The 2026 linker yield

We can see a steep increase in RPI in April 2025, for which the corresponding increases in the principal and interest rates of the 2026 linker would play out over the course of June.

Thus, as June progresses, with more of that April gain locked in and the prospect of a lower future inflation uplift, the market works to increase the real yield to compensate for it.

Which explains the surge that we saw earlier in the yield graph for the 2026 linker.

Coincidentally, there is also a big rise in RPI in April 2023 which would similarly account for the June rise in yield for the 2024 linker.

Adding it all up

I’ve shown below a comparison of the annual inclusive yield of the 2026 linker and the corresponding yield on offer at the time from the conventional gilt maturing on 31/01/2026.

The ‘inclusive yield’ here means the total return including inflation indexing — the real yield plus the RPI uplift.

Obviously, at the time you didn’t know what the inclusive yield would be. But we do know this retrospectively, now we have all the inflation data:

Despite the headline yield for the 2026 linker swinging up three or four percentage points, the inclusive yield doesn’t change by much more than one point, and then much more gradually.

The swings in headline yield experienced since June are just smoothing out the monthly fluctuations in RPI to give an expected inclusive yield that isn’t a million miles from what you could get from a conventional gilt with a similar maturity date.

Which is pretty much what you’d expect from an efficient market.

These seemingly violent moves in real yield are really just the market doing its job – adjusting for inflation data already known to investors.

Not so wild linkers?

Rather disappointingly then, and despite my rather racy title, the last year of a linker is not wild at all. It looks a lot like the last year of a conventional gilt.

In other words, a bit like holding cash.

Indeed funds like Vanguard U.K. Inflation-Linked Gilt Index and iShares £ Index-Linked Gilts ETF (both based on the Bloomberg U.K. Government Inflation-Linked Float Adjusted Bond Index) sell gilts in their final year. There isn’t much inflation protection left in them by this stage.

The hangover

Experienced linker investors will know all this already. I suspect some are now rolling their eyes – assuming of course that they got this far.

But I only started dabbling in linkers last year. And I jumped into the middle of the yield spike to see what would happen. Having some money invested is the only way I seem to be able to focus my attention enough to learn about different instruments.

My future – wiser – self now knows:

• Not to confuse a temporary spike in headline linker yield with the genuine prospect of a better return.
• To consider the baked-in effect of the last couple of RPI values when judging the value of a linker nearing maturity.
• There’s nothing exciting about linkers in their last year and very little to be gained by buying, or for that matter selling, in this period.

So I didn’t get rich, but I did learn something – which is the best kind of return you could wish for. (Just as The Investor told me when he agreed to let me write for Monevator…)

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