About the cautious core portfolio
The cautious core portfolio is a 60/40 blend of broad global equity and hedged global investment-grade bonds. It is built for investors who want a single, simple model that is easier to hold through equity drawdowns — without pretending the bond sleeve is optional. The portfolio is not a recommendation; it is one illustration of how the building blocks on this site can be combined into a balanced default for a UK investor.
Holdings and weights
- 60% Vanguard FTSE All-World UCITS ETF (VWRP) — the equity core. Around 3,700 holdings spanning developed and emerging markets, accumulating share class so dividends are reinvested automatically inside an ISA or SIPP. Ongoing charges roughly 0.22%.
- 40% iShares Core Global Aggregate Bond UCITS ETF GBP Hedged (AGGU) — the ballast sleeve. Investment-grade global government and corporate bonds, hedged to sterling so currency movement does not amplify the bond return. Ongoing charges roughly 0.10%.
What the portfolio is trying to do
The equity sleeve provides long-term growth and broad geographic diversification. The bond sleeve cushions equity drawdowns and provides a source of rebalancing capital when equities fall sharply. The currency hedge on the bond sleeve removes a major source of volatility that can otherwise undermine the very ballast effect that bonds are meant to provide.
Who this is for
Investors with a long horizon (ten years plus) who do not want maximum equity risk and who would rather sit through a 30%+ equity fall holding a balanced portfolio than a 100% equity portfolio. The 60/40 ratio is a starting point, not a target. Younger investors with longer horizons may prefer 80/20; investors closer to drawdown may prefer 40/60.
Who should look elsewhere
If you already know you want maximum long-term equity exposure and minimal ballast, see the one-fund global portfolio. If you need cashflow in retirement, see the income tilt portfolio or the drawdown portfolio guide.
Tax wrappers
Both holdings are UCITS ETFs domiciled in Ireland and listed on the London Stock Exchange in GBP, which means they are eligible for ISAs, Junior ISAs, SIPPs, and General Investment Accounts. Holding them inside an ISA or SIPP shelters dividends and capital gains from UK tax. Outside a wrapper, dividend tax and capital gains tax can apply — see the ISA vs GIA guide for how the choice affects long-term return.
Rebalancing
An annual rebalance back to 60/40 is usually sufficient. Threshold-based rebalancing (for example, only rebalancing when the equity weight drifts more than five percentage points away from target) can reduce trading and dealing costs. Rebalancing inside an ISA or SIPP is tax-free; in a GIA, rebalancing trades can trigger capital gains.
Key risks
Both equities and bonds can fall in value, and they sometimes fall together — 2022 was a recent example. Past performance is not a guide to future returns. The currency hedge on the bond sleeve protects against currency volatility, not credit risk or interest-rate risk. The portfolio has no UK-specific tilt; if you want a UK-listed equity overweight or a gilt-only ballast sleeve, see the best bond ETFs guide.
Educational content only. Not financial advice. Investment values can fall as well as rise, and you may not get back what you invested. ETF holdings, charges, and weights are illustrative and may change. Always check current factsheets and consider your own circumstances before investing.