3 ETF portfolios, 10,000€, and 10 years: Which portfolio wins?

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3 ETF portfolios, 10,000€, and 10 years

Imagine you had 10,000€ squirrelled away in a simple MSCI World portfolio ten years ago. How much would your money have grown? This chart tells the story: We’ve selected three straightforward ETF portfolios for this comparison - each one using an MSCI World equity ETF as its engine room. The 100% MSCI World equity ETF portfolio (orange line) has performed staggeringly well over the past ten years:  10,000€ grew more than threefold: transforming into 30,990€ simply by using a buy and hold strategy. That’s a 210% cumulative growth rate or an astounding 12% annualised. You had to withstand a sharp dip during the Covid crash of 2020, and choppy waters during 2022 to 2023, but overall, the past ten years has been a fantastic time to hold a diversified global stock index like the MSCI World.

Lower returns, lower risk

The problem with going all-in on equities is that they are a risky asset class that can dip into the red for long periods. That’s why it’s a good idea to diversify into other assets. We’ve done exactly that by pairing the iShares Core MSCI World ETF with an iShares Euro Government Bond ETF (blue line) – using a classic 60 / 40 asset allocation. That should make your portfolio less susceptible to stock market crashes but is also likely to lower its overall return – and that’s exactly what we see in the chart above. 10,000€ more than doubled – becoming 22,831€ in ten years. That’s a 128% cumulative growth rate or 8.6% annualised. Volatility (a measure of risk) was also lower, weighing in at 11% versus 16% for the 100% MSCI World portfolio. In other words, this portfolio was less of a wild ride than its full-on equity counterpart.

Golden child

Our final portfolio added gold into the mix. Gold is a great diversifier as it often performs when equities and bonds falter. That’s why the 60 / 20 / 20 (red line) portfolio pulls away from the 60 / 40 portfolio after Covid hits. Gold performed well versus bonds during that period of high inflation and uncertainty. Thus our gold-plated portfolio has the edge over the 60 / 40 – turning 10,000€ into 25,123€. That’s an impressive 151% cumulative growth rate or 9.6% annualised.

What to do?

For comparison, 10,000€ in cash grew to 10,174€, achieving a miserly 1.7% cumulative growth. So whichever portfolio you picked, you’d have beaten cash handsomely over the last ten years. To be sure, 100% equities typically beats less risky portfolios over ten-year periods and longer, as we can see above. But there are no guarantees. And that’s why many investors choose the slow and steady route by adding diversifying asset classes like bonds, gold and commodities.