Investing isn’t about chasing the best-performing fund—it’s about managing risk and ensuring steady, long-term growth. While passive funds are often seen as a simple way to track the market, it’s important to understand that not all passive funds are the same. There are thousands of options, each tracking different indices using various methods. Even two funds tracking the same index can deliver very different returns.
However, what all passive investors ultimately achieve is the market return—essentially, an average return. In contrast, actively managed funds, despite their claims of outperforming the market, often result in below-average return and charge a higher price for the privilege!
The Power of Diversification
Rather than putting everything into a single passive fund, it makes sense to invest in a mix of funds across different markets. No one can predict which market will perform best in any given year. History has shown that equity returns fluctuate—one year’s winner can be next year’s loser. That’s why diversification is key.
Our portfolios have a higher exposure to the US—given it makes up around 60% of the global stock market—and we also maintain a home bias towards the UK. That said, we don’t overlook stocks in other key markets such as Japan and the Pacific region. Including a range of global investments also helps manage volatility over time. Yes, this means accepting an ‘average’ return—but when markets are unpredictable, being average is often far better than being at the bottom!
By diversifying, we’re not trying to predict the next big winner—we’re ensuring you’re always positioned to benefit from global market growth while reducing risk along the way.
The table below shows how no single equity market consistently comes out on top. The best performer changes each year, making it impossible to predict the winner.
This is why "Average Joe" takes the smart approach—investing in a diversified 100% equity fund with exposure to all markets. Instead of chasing short-term gains, diversification ensures steady growth while reducing risk.
Without a crystal ball, being Average Joe isn’t just sensible—it’s the best way to achieve long-term success.
Spring Statement
Not wanting to rehash everything in the headlines, but it’s worth recapping where we stand.
Back in October, Rachel Reeves announced that the government had a budget headroom (or surplus) of around £9–10 billion—essentially meaning more money coming in than going out by the end of this parliament. Fast forward to this week, and that headroom has been wiped out, largely due to higher interest payments on UK government debt (now costing around £105 billion this year).
To keep things on track, Rachel has found savings through cuts to the civil service and welfare, and we are (for now) back on course for another surplus. She remains committed to not borrowing to fund day-to-day spending—so in simple terms, government spending must be covered by tax revenues.
This is where the challenge lies. The Truss government’s 'mistake' was announcing unfunded tax cuts (i.e., no clear plan to replace the lost revenue), which spooked the markets and pushed up interest costs on UK debt. While Labour has a large majority and can, in theory, pass whatever policies it likes, Reeves has a tricky balancing act ahead.
The big question is: can she find a way to raise more money without breaking her commitment not to increase Income Tax, National Insurance, or VAT? Or will she be forced into something rather un-Labour-like—spending cuts?
Of course, there’s always a chance she gets lucky, and economic growth delivers more tax revenue than expected. But if not, something has to give…And no, we’re not going to get into whether the rise in employers’ NI was a broken promise—that’s a debate for another day!
Now we wait for October’s Budget to see how this all plays out! No doubt there’ll be a few surprises along the way…
