We analyse a globally diversified portfolio covering five asset classes — equities, REITs, cryptocurrencies, bonds, and cash — over the period January 2018 to August 2023. The portfolio achieved a total return of approximately 50% and an annualised average of ~10%, demonstrating that effective diversification is accessible to any investor, regardless of experience level.
Why Start in 2018?
We chose 2018 as the starting point for two reasons. First, a five-year horizon provides a meaningful medium-term perspective — long enough to capture a full market cycle (including the 2020 crash and recovery), yet short enough to remain relevant to today's investor. Second, the inclusion of cryptocurrencies makes 2018 particularly relevant: digital assets only gained broad recognition from around 2012 onward, and starting a decade earlier would have made crypto returns disproportionately dominant, distorting the overall picture.
The assets in this portfolio were chosen primarily for their popularity and market presence, not for complex technical reasons. The goal is an analysis that any investor — even one without a financial background — can understand and relate to their own decisions.
Portfolio Composition at a Glance
The portfolio is built across six distinct buckets, each serving a different role in the overall strategy:
| Asset Class | Allocation | Role |
|---|---|---|
| Stock Indices | 40% | Growth engine |
| REIT Indices | 30% | Income + real asset exposure |
| Cryptocurrencies | 5% | High-risk / high-reward satellite |
| US Treasury Bonds | 2.5% | Stability + safe haven |
| Corporate Bonds | 2.5% | Yield enhancement |
| Cash Reserve | 20% | Flexibility + opportunity fund |
Diversification here is not simply about owning different assets — it is about understanding how those assets interact. When equities fall, bonds and cash absorb the shock. When inflation rises, REITs tend to preserve value. The modest crypto position adds growth optionality without exposing the whole portfolio to extreme volatility.
Stock Indices — 40%
The equity allocation is split across three indices: the S&P 500 (20%), the NASDAQ Composite (15%), and the MSCI World Index (5%).
The S&P 500 anchors the equity sleeve with its long track record and relatively predictable annualised return profile. The NASDAQ tilts the portfolio towards the technology sector, which has been the highest-returning segment of global equities over the last decade. The MSCI World adds international diversification beyond the US, capturing growth in developed markets across Europe, Japan, and Australia.
This combination balances stability (S&P 500) with growth (NASDAQ) and geographic reach (MSCI World), without concentrating too heavily on any single theme.
REIT Indices — 30%
The largest single allocation goes to Real Estate Investment Trusts, split equally between the Vanguard Real Estate ETF (15%) and the iShares Global REIT ETF (15%).
Vanguard Real Estate ETF invests in companies that own and operate physical real estate in the United States — offices, apartments, logistics warehouses, data centres, and retail. The iShares Global REIT ETF broadens exposure internationally, capturing property markets in Europe, Asia-Pacific, and beyond.
The high REIT allocation reflects a deliberate choice to gain real asset exposure without the complexity of direct property ownership. REITs are legally required to distribute at least 90% of taxable income as dividends, making them a meaningful source of portfolio income alongside capital appreciation.
Cryptocurrencies — 5%
The crypto allocation is split between Bitcoin (BTC) at 3.5% and Ethereum (ETH) at 1.5%. Both represent the two largest and most liquid digital assets by market capitalisation, with the longest track records in the space.
The 5% position is intentionally small. The purpose is not to bet on crypto as the portfolio's primary driver — it is to add asymmetric upside potential. If crypto appreciates significantly, it contributes meaningfully to total return; if it falls sharply, the impact on the overall portfolio remains contained.
Cryptocurrencies are among the most volatile financial assets in existence. Bitcoin and Ethereum have both experienced drawdowns exceeding 70–80% from peak to trough within a single cycle (e.g., 2018 and 2022). Unlike stocks or bonds, crypto assets have no underlying earnings, no cash flows, and no regulatory safety net in most jurisdictions.
Price movements are driven by sentiment, speculative flows, regulatory announcements, and macro liquidity — factors that are extremely difficult to predict. An investor allocating 5% to crypto must be fully prepared to see that position lose 80–90% of its value before (and if) it recovers.
Never allocate money to cryptocurrencies that you cannot afford to lose entirely. If you are a risk-averse investor, reducing this allocation to 1–2% — or eliminating it altogether — is entirely rational.
The 5% "high-risk satellite" slot does not have to be cryptocurrencies. Its purpose is to provide asymmetric upside potential — a small bet with the possibility of outsized returns that, even if lost entirely, does not sink the broader portfolio. Other assets or activities can serve the same role:
Starting or investing in a small/medium business — direct business ownership can generate returns far exceeding any financial market if successful, though the risks and time demands are also higher.
Angel investing or startup equity — investing in early-stage companies carries binary risk (total loss is common) but successful exits can deliver extraordinary multiples.
Emerging asset classes — commodities, private credit, infrastructure funds, or other alternative assets that offer different risk/return profiles from traditional equities and bonds.
The key principle is the same: keep the high-risk satellite small enough that a total loss is survivable for the overall portfolio.
Bonds — 5% Combined
The bond sleeve is split between US Treasury Bonds (2.5%) and Corporate Bonds (2.5%), each further diversified across two ETFs.
The Treasury allocation uses the iShares 7–10 Year Treasury Bond ETF (IEF) for intermediate-duration US government exposure, and the Bloomberg Barclays Global Treasury Index for international government bond diversification. Treasuries act as the portfolio's safe haven: during equity drawdowns, they typically appreciate as investors seek safety.
The corporate bond sleeve uses the iShares Global Corporate Bond ETF (CORP) and the iShares iBoxx Investment Grade Corporate Bond ETF (LQD). Both focus on investment-grade issuers — companies with strong credit ratings — offering a yield premium over government bonds with manageable credit risk. Together, they contribute predictable income and dampen overall portfolio volatility.
Cash Reserve — 20%
Maintaining a 20% cash reserve is a strategic, not passive, choice. Cash enables the portfolio to respond to market dislocations — buying equities or REITs at significantly lower prices during crashes like March 2020 — without requiring the sale of existing positions at a loss.
In combination with the 5% bond allocation, the effective "safety cushion" of this portfolio is around 25% at all times. This provides meaningful downside protection and psychological stability during periods of high volatility.
It is worth noting that in environments where short-term interest rates are elevated (as in 2022–2024), cash held in money market funds or high-yield savings accounts can itself generate 4–5% annual yield — making it a productive, not idle, allocation.
Performance Analysis 2018–2023
Over the full period from January 2018 to August 2023, the portfolio achieved a total return of approximately 50%, equivalent to an annualised average of nearly 10% per year. Below are the individual asset returns over the same period.
Returns by Asset Class
| Asset | Allocation | Total Return (2018–2023) |
|---|---|---|
| S&P 500 | 20% | +70.22% |
| NASDAQ Composite | 15% | +104.74% |
| MSCI World Index | 5% | +64.87% |
| Vanguard Real Estate ETF | 15% | +26.93% |
| iShares Global REIT ETF | 15% | +12.43% |
| Bitcoin (BTC) | 3.5% | +114.02% |
| Ethereum (ETH) | 1.5% | +140.23% |
| iShares 7–10Y Treasury Bond ETF | 1.25% | +0.04% |
| Bloomberg Barclays Global Treasury Index | 1.25% | +2.11% |
| iShares Global Corporate Bond ETF | 1.25% | +5.18% |
| iShares iBoxx IG Corporate Bond ETF | 1.25% | +7.30% |
| Cash | 20% | ~0% (pre-2022) → 4–5% (2022–2023) |
The Equity Engine
Equities were the backbone of total returns. The S&P 500's 70.22%, NASDAQ's 104.74%, and MSCI World's 64.87% all contributed meaningfully, and their relatively low correlation to one another helped smooth the ride. The technology tilt via NASDAQ proved rewarding over this period, though investors should note this sector is also capable of the sharpest drawdowns — the NASDAQ fell over 30% from its late-2021 peak before recovering.
REITs: Steady but Modest
REITs underperformed relative to equities, with Vanguard Real Estate returning 26.93% and iShares Global REIT 12.43%. Their primary value lay not in return magnitude but in diversification: property markets are driven by different economic forces than stock indices, and the high dividend yields provided income during periods of flat capital growth.
Crypto: The Volatile Outperformer
Bitcoin (+114%) and Ethereum (+140%) were the highest individual-asset performers over the period, but this figure requires important context. Both assets experienced catastrophic drawdowns during this window — Bitcoin fell approximately 75% from its November 2021 high to its late-2022 low. An investor who measured performance at the trough would have seen deeply negative crypto returns. The positive five-year outcome was only realised by those who held through extreme volatility without panic-selling.
This is precisely why the allocation was kept at 5%: the asymmetric upside was captured, the downside impact was limited, and the investor could hold through the storm because the position was not existentially significant to the portfolio.
Bonds and Cash: The Portfolio's Shock Absorbers
Bond returns were muted over this period (0.04% to 7.30%), reflecting the rising interest rate environment of 2022 which hurt fixed income prices. However, their role was never to generate returns — it was to reduce overall portfolio volatility and provide liquidity. The cash reserve, similarly low-yielding in 2018–2021, became a genuinely productive asset when short rates rose above 4% in 2022–2023.
Portfolio Volatility and Risk
The overall portfolio exhibited a daily volatility of approximately 0.83% — a figure that reflects the benefits of combining assets with different volatility profiles and low correlations.
This volatility can be broken into two components:
- Diversifiable risk (~0.00518% per day): Risk arising from factors specific to individual assets — a single company's earnings miss, regulatory action against one sector, etc. This is reduced through diversification across many uncorrelated assets.
- Non-diversifiable (systemic) risk (~0.00175% per day): Risk driven by broad market forces — recessions, interest rate shocks, pandemics — that affect all assets simultaneously. This cannot be eliminated through diversification, only managed through cash and bonds.
The low level of diversifiable risk in this portfolio demonstrates that thoughtful allocation — even across just a handful of ETFs and indices — can dramatically reduce the impact of any single asset's bad performance on the whole.
Conclusion: Diversification Within Everyone's Reach
Investing does not require deep technical expertise. This portfolio demonstrates that a straightforward allocation across popular, liquid asset classes — stock indices, REITs, a small high-risk satellite, bonds, and cash — can achieve a compelling 10% annualised return over a multi-year horizon that included a global pandemic, a crypto crash, and a historic rate hiking cycle.
What matters most is not picking the single best-performing asset, but combining assets intelligently so that their strengths offset each other's weaknesses. The equity engine drives growth. REITs add income and real asset exposure. Bonds and cash absorb shocks and provide capital to deploy when opportunities arise. The 5% satellite — crypto or otherwise — adds optionality without threatening the whole.
This analysis is illustrative, not a recommendation. Every investor has a unique risk tolerance, time horizon, tax situation, and financial goal. What works as a portfolio example may not be right for your individual circumstances. Always consider your own situation — or consult a regulated financial adviser — before making investment decisions.
⚠️ Disclaimer: Past performance is not indicative of future results. The portfolio and analysis presented here are for educational and illustrative purposes only and do not constitute financial advice or an investment recommendation. All investment involves risk, including the possible loss of the entire amount invested. Cryptocurrency investments are particularly high risk and are not suitable for all investors. WhichBrokr is not a licensed financial adviser.