World and euro government bonds: diversification has limits
- iShares Core MSCI World UCITS ETF USD (Acc)World equities · IWDAIE00B4L5Y983
- iShares Core € Govt Bond UCITS ETF EUR (Dist)Euro government bonds · IEGAIE00B4WXJJ64
Data and calculation
Angular width shows the holding’s weight. Tiles rise outward for a gain and inward for a loss, on the same scale. The hairline marks zero; very small moves keep a minimum visible band. Returns are the checker’s annualised one-year replay in nominal EUR, using adjusted prices and the engine’s weekly grid. Portfolio weights are held constant; these are not the returns of an investor’s account. Fund costs are embedded, tax and inflation are excluded. Past returns do not predict future returns.
- .
- Fees
- A
- Long-term assumptions
- C
- Historical efficiency
- D
- Crises
- B
- Diversification
- B
This portfolio combines corporate growth with claims on eurozone governments. Its simplicity and low fees are strengths. The bond sleeve adds a different exposure, but remains sensitive to interest rates and sovereign issuers. It can lose value while equities fall, so its bond label alone does not establish crisis protection.
The portfolio holds 60 % IWDA and 40 % IEGA. The former invests in developed-market equities; the latter in investment-grade eurozone government bonds. Issuer factsheets describe physical funds, using optimisation for World and sampling for bonds. [1][2]
The key question is the role intended for IEGA: diversify long-term savings or provide capital for spending soon. A sleeve of tradable debt serves these needs differently from a stable reserve.
Fees: a real advantage that leaves market risk intact
Recurring charges of 0.15% per year earn A. The allocation obtains both equity and sovereign-bond exposure cheaply, so high ongoing charges are not the main explanation for its weak historical efficiency. Low fees preserve returns from each sleeve; they cannot offset a fall in bond prices or poor compensation for the risks taken.
- This portfolio
- 9.29%
- MSCI World
- 18.85%
This reading excludes personal taxation, brokerage commissions and bid-ask spreads. Distributions from the bond share class may also create cash flows to reinvest; the World share class accumulates income. [1][2]
Long-term assumptions: a compromise below the frontier
The 40 % bond sleeve replaces some of the model’s equity growth with a lower expected return and lower volatility. The compound-growth gap to the model optimum is -1.74 percentage points per year, earning C. Part of that gap reflects the decision to bear less equity risk. The reference maximises growth without requiring the same risk, so the whole gap cannot be described as an improvement available through a like-for-like switch.
| Portfolio and model optimum | Expected growth | Volatility |
|---|---|---|
| This portfolio | 6.08% | 10.18% |
| Model growth optimum | 7.82% | 15.25% |
The captured frontier represents opportunities in the marketable universe under the house long-term assumptions. The portfolio sits below the curve: the model finds other combinations with higher expected growth at similar volatility. That comparison depends on the available exposures and constraints; it does not identify a suitable trade or forecast an imminent correction.
Crises: bonds do not hedge every shock
The B comes from a simulated loss of -22.88%. The smaller equity weight does most of the cushioning; the bond sleeve also loses value under the model’s US-equity shock sensitivity. In this scenario it reduces damage by replacing part of the equity exposure, without paying a gain that offsets the remaining equities. A bond label alone does not establish a hedge.
Data and method
The chart replays today’s portfolio weights through the checker’s weekly adjusted-price history in nominal EUR. Each line starts at 100 on the same date. The S&P 500 path is the checker’s US-equity total-return ETF proxy, including distributions. The portfolio is rebalanced to constant weights on the engine’s weekly grid. It is not an investor’s account history. Fund costs are embedded; tax, inflation and trading costs are excluded. Weekly observations can miss a deeper daily or intraday loss. Recovery is the first weekly observation back at the peak preceding the largest decline, within the displayed window.
The crisis grade uses the separate modelled 40% US-equity shock. This historical replay does not determine or change that grade, and it is not a forecast.
- This portfolio
- Not recovered by 29 December 2023
- S&P 500
- Back to the previous peak: 19 August 2022
Only complete episodes in the captured history, with an S&P 500 drawdown of at least 10%, are eligible. The selected episode has the highest portfolio drawdown relative to the S&P 500 drawdown. This highlights where the portfolio offered the least cushioning among the episodes tested; it is not necessarily its largest absolute loss or the worst crisis since 1998. The table lists every eligible comparison.
| Crisis replay | This portfolio | S&P 500 |
|---|---|---|
| Equity sell-off | -7.8% | -13.2% |
| Covid-19 | -19.2% | -28.7% |
| The rate reset | -15% | -16.7% |
| Tariff sell-off | -12% | -20.6% |
| Replay date | This portfolio | S&P 500 |
|---|---|---|
| 100 | 100 | |
| 101.4 | 103 | |
| 101 | 102.6 | |
| 101.8 | 104.2 | |
| 101.8 | 105.6 | |
| 100.5 | 102.8 | |
| 99.7 | 101.2 | |
| 98.3 | 98.5 | |
| 97.3 | 97.4 | |
| 96.5 | 97.6 | |
| 96.8 | 98.1 | |
| 95.8 | 95.9 | |
| 96.1 | 96.7 | |
| 96.9 | 98.1 | |
| 95.1 | 97 | |
| 97.3 | 100.1 | |
| 97.9 | 102.7 | |
| 97.9 | 102.5 | |
| 97.8 | 103.6 | |
| 96.8 | 102.6 | |
| 95.4 | 100.5 | |
| 95.2 | 100.3 | |
| 93 | 97.5 | |
| 93.1 | 96.7 | |
| 90.8 | 91.9 | |
| 93.2 | 96.5 | |
| 92.2 | 96 | |
| 89.7 | 93 | |
| 86.6 | 87.9 | |
| 89 | 92.2 | |
| 88.9 | 91.2 | |
| 91.5 | 96.4 | |
| 91.5 | 95.9 | |
| 92.7 | 97.5 | |
| 95.2 | 100.8 | |
| 95.5 | 101.7 | |
| 96.4 | 104 | |
| 96.3 | 105.7 | |
| 94.9 | 103.5 | |
| 92.7 | 100.6 | |
| 92.8 | 101.7 | |
| 90.5 | 96.7 | |
| 89.1 | 95.5 | |
| 87.5 | 94.1 | |
| 88.2 | 94.5 | |
| 87 | 93.6 | |
| 87.2 | 95 | |
| 89.7 | 97.8 | |
| 88.7 | 94.8 | |
| 90.1 | 96.6 | |
| 90.4 | 96.5 | |
| 91.5 | 97.7 | |
| 91.6 | 97.3 | |
| 90.3 | 95 | |
| 87.7 | 91.6 | |
| 87.1 | 91.1 | |
| 86.5 | 90.5 | |
| 88.2 | 92.2 | |
| 89.1 | 92.8 | |
| 88.9 | 91.7 | |
| 90 | 94.6 | |
| 91.7 | 97.5 | |
| 90.8 | 96.6 | |
| 90.4 | 96.1 | |
| 89.4 | 94.9 | |
| 89.7 | 95.9 | |
| 88.9 | 93.4 | |
| 89.1 | 93.2 | |
| 89 | 92.8 | |
| 90.2 | 95.2 | |
| 90.4 | 94.9 | |
| 90.1 | 95.3 | |
| 89.9 | 95.3 | |
| 90.2 | 95.4 | |
| 90.2 | 94.9 | |
| 91 | 96.2 | |
| 91.6 | 98.3 | |
| 91.6 | 99.5 | |
| 93.2 | 101.3 | |
| 92.9 | 101.6 | |
| 93.7 | 103 | |
| 93 | 101.6 | |
| 93.9 | 103.5 | |
| 92.5 | 102.5 | |
| 93.2 | 102.3 | |
| 94.1 | 104.1 | |
| 95.2 | 105.8 | |
| 94 | 104.4 | |
| 93.3 | 103.5 | |
| 92.3 | 102.2 | |
| 93.4 | 103.7 | |
| 95 | 106.6 | |
| 94.7 | 106.4 | |
| 95 | 106.7 | |
| 93.5 | 104.2 | |
| 93 | 104 | |
| 92.1 | 103.2 | |
| 93.6 | 105.4 | |
| 91.4 | 102.1 | |
| 90.6 | 99.9 | |
| 93.2 | 103.9 | |
| 93.4 | 104.7 | |
| 94.7 | 105.8 | |
| 94.8 | 106.5 | |
| 96.2 | 107.7 | |
| 97.5 | 109.2 | |
| 99.1 | 110.7 | |
| 99.1 | 110.6 | |
| 99.2 | 110.8 |
IEGA has an effective duration of 6.68 years in the product factsheet. This measures sensitivity to bond yields: rising yields lower the price of existing securities. Coupons do not immediately offset that decline. The EUR share class lost -18.52% in 2022, with gross income reinvested. That episode illustrates fund risk; it is not a stress result calculated for the whole portfolio. [2]
Falling yields can support bonds, whereas an inflation shock can hurt both equities and debt. Resilience varies with the cause of the crisis. Spending horizons also affect the consequences of a loss when capital is needed before prices recover.
Diversification: different drivers, continuing dependencies
| Expected classes | World | Euro government bonds |
|---|---|---|
| World | 1.00 | 0.22 |
| Euro government bonds | 0.22 | 1.00 |
Fund correlations · past 12 months
| This portfolio | IWDA | IEGA |
|---|---|---|
| IWDA | 1.00 | 0.41 |
| IEGA | 0.41 | 1.00 |
The expected matrix gives a correlation of 0.22 between global equities and euro government bonds as asset classes. The observed matrix instead measures fund returns over the year ending at the last price date. Positive correlation means they sometimes moved together; a value below unity still permits diversification benefits. These measures concern different objects and horizons, and do not establish protection in every crisis.
Unlike a reserve earning the cash baseline, sovereign bonds contribute expected growth above that baseline. Some of it survives when the model stops the dominant equity driver, supporting B. The 2 growth sources therefore represent different economic contributions, although equities still supply most expected growth. This favourable diversification reading can coexist with weak historical efficiency: the forward relationships and the realised return window are different evidence.
At 30 September 2026, France accounts for 23.69% and Italy for 21.47% of the bond fund holdings. These are IEGA fund weights, rather than total portfolio weights or a composition attributed to its index. The sleeve reduces dependence on companies but concentrates sovereign credit risk within one monetary region. [2]
Points to consider
The C overall grade combines low costs and some diversification with weak historical efficiency. Its B crisis grade mainly reflects reduced equity exposure, while bonds still add interest-rate risk. Whether that bond sleeve offers useful resilience depends on its intended role, spending horizons and behaviour during inflation and yield shocks as well as equity crashes.
The bond sleeve’s purpose
Is IEGA intended to diversify long-term savings or fund spending at a known date? Its duration and past loss make the timing of a sale relevant. Rebalancing also involves a tradeoff between restoring weights and preserving capital for those expenses. [2]
Different causes of a crisis
How might the portfolio behave when bond yields or sovereign credit spreads rise, rather than when equities alone fall? Other investments elsewhere in the household may share or offset those risks. Their costs and constraints affect any comparison.
Exposure to eurozone governments
How much exposure to IEGA’s largest sovereign issuers is already present elsewhere in the investor’s wealth? A different fund label may still carry the same interest-rate or issuer risk. Whether another exposure changes those dependencies is a separate question from the number of holdings. [2]
Other portfolios
Method and limitations
Calculation dated 23 October 2026, engine portfolio-score-v10. History runs from 22 October 2016 to 22 October 2026, in nominal euros at constant weights, without personal cash flows or taxation. Excluded share: 0%; history filled with asset-class series: 0%. The engine nevertheless flags incomplete underlying history and missing economic composition. These warnings limit transparency despite final coverage. The score text identifies Copio CMA without a vintage; frontier metadata specifies Copio Capital Market Assumptions 2026 Q4, published on the nineteenth of October in the calculation year. Assumptions, holdings and prices have different dates. The frontier is forward-looking; past returns and scenarios guarantee no future outcome.
Estimated decline under a shock of -40% to US equities. Historical returns are annualised in euros, as calculated by the portfolio checker.
How copio analyses portfolios ↗Sources
- iShares Core MSCI World UCITS ETF: September factsheet ↗Reference date:
Fund holdings dated September end; product data dated 5 October 2026. Physical, optimised replication; not an index holdings table.
- iShares Core Euro Govt Bond UCITS ETF: September factsheet ↗Reference date:
Fund breakdown and NAV returns at September end; duration and product data dated 5 October 2026. EUR distributing share class, physical sampled replication.