Key insights
- The post discusses concerns about portfolio underperformance and the role of bonds in mitigating risk during market downturns. The author questions whether adding bonds (VAGF) will truly provide downside protection compared to an all-equity portfolio (VWCE and small-cap value). The potential impact on US equities is slightly negative, as a shift away from small-cap value could reduce investment in US companies.
I’ve constructed my portfolio like this:
80% VWCE 10% Small Cap Value Europe 10% Small Cap Value USA
What I’m afraid it that this will underperform for quite some time and cause me a headache. When things go bad I tend to search for a way to „optimize” or exchange for „better performing” instruments. I was thinking:
a) yolo go full VWCE and chill b) selling small cap for something like VAGF
The thing is - I know the bonds are lowering the overall performance of the portfolio and I’m honestly not sure that they will help me get through things like -40%. What do you think?