World and money markets: cushioning losses has a cost
- iShares Core MSCI World UCITS ETFWorld equities · IWDAIE00B4L5Y983
- Amundi Smart Overnight Return UCITS ETF AccEuro money market · CSH2LU1190417599
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
- C
- Crises
- B
- Diversification
- D
Combining World with a money-market allocation reduces the need to sell equities during a downturn. The trade-off is clear: less capital participates in rallies, but less capital absorbs equity losses. The reserve does not guarantee the portfolio or, by itself, provide a second long-term growth engine.
This ordinary brokerage account holds 70 % in IWDA, an MSCI World ETF, and 30 % in CSH2, Amundi Smart Overnight Return. The two holdings have different roles: the first provides equity growth; the second seeks exposure to very short-term euro interest rates. [3]
This allocation gives an explicit role to accessible capital. It is easier to interpret than a collection of equity funds expected to protect each other. The reserve can serve different purposes: planned spending, tolerating losses or rebalancing.
Fees: modest costs across both allocations
The 70 % World holding and 30 % money-market holding combine at 0.17% per year in recurring costs, earning A. Their low charges preserve most of each exposure’s gross return. Fees are especially relevant to the reserve because they consume part of a smaller expected return; the good fee grade does not remove that opportunity cost.
The calculation excludes dealing charges, execution spreads and tax in the brokerage account. Regularly selling small amounts to restore the target weight may add costs. The cost of rebalancing depends on its frequency and the broker’s terms.
Long-term assumptions: the reserve also lowers expected growth
Putting 30 % in money market reduces the capital exposed to equity losses and the capital earning the model’s equity growth assumption. The resulting -1.87 percentage points per year expected growth gap earns C. This is the economic price of the reserve in a growth-based comparison. Its value for planned spending or liquidity is outside this grade, so chasing a higher letter could undermine the reason for holding it.
Money-market returns renew with short-term interest rates. The ECB defines €STR using euro-area banks’ wholesale overnight borrowing costs. This mechanism does not lock in a return for the years ahead. If rates fall, the future return on a money-market exposure can decline. [2]
Inflation is another limitation: capital that is relatively stable in nominal terms can lose purchasing power. A reserve serves a particular function. Making it the entire long-term strategy introduces a different risk: failing to grow wealth sufficiently.
Crises: a cushion, not insurance
The reserve lowers the amount of capital transmitting the equity shock. The remaining 70 % in World still produces most of the simulated -25.41% loss, for B. The improvement comes mainly from owning fewer equities, with only a small offset from the monetary sleeve in this model. It is a smaller loss exposure, without a payoff designed to grow as an equity crash deepens.
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
- Back to the previous peak: 1 January 2021
- S&P 500
- Back to the previous peak: 8 January 2021
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 | -9.7% | -13.2% |
| Covid-19 | -21.3% | -28.7% |
| The rate reset | -11.1% | -16.7% |
| Tariff sell-off | -13.2% | -20.6% |
| Replay date | This portfolio | S&P 500 |
|---|---|---|
| 100 | 100 | |
| 101.1 | 101.8 | |
| 101.9 | 103.4 | |
| 102.1 | 103.8 | |
| 99.8 | 101 | |
| 102.8 | 105.3 | |
| 104.1 | 107.8 | |
| 103.5 | 106.6 | |
| 94.6 | 91.8 | |
| 92.4 | 90.3 | |
| 83.1 | 79.4 | |
| 82 | 76.9 | |
| 84.2 | 79.8 | |
| 84.8 | 80.1 | |
| 90.4 | 88.6 | |
| 91.4 | 90.5 | |
| 90.9 | 89.8 | |
| 91.4 | 92.3 | |
| 93.2 | 93.3 | |
| 92 | 90.9 | |
| 93.4 | 93.7 | |
| 94.3 | 94.2 | |
| 97.3 | 98.6 | |
| 94.5 | 93.9 | |
| 96.9 | 97.4 | |
| 95.2 | 94 | |
| 96.5 | 96.7 | |
| 96.8 | 97.3 | |
| 97.6 | 98.1 | |
| 96.4 | 96.4 | |
| 95.4 | 95.5 | |
| 97.4 | 98.9 | |
| 98.1 | 99.5 | |
| 98.5 | 100.2 | |
| 99.3 | 102.4 | |
| 97.8 | 99.9 | |
| 97.9 | 98.8 | |
| 97.9 | 98.1 | |
| 97.2 | 98.1 | |
| 98.3 | 99.9 | |
| 99.7 | 102.5 | |
| 100.5 | 104.4 | |
| 99.3 | 101.9 | |
| 96.4 | 97.9 | |
| 100.2 | 103.2 | |
| 102.3 | 105.3 | |
| 102.8 | 105.6 | |
| 104 | 106.5 | |
| 103.5 | 106.5 | |
| 102.6 | 105.3 | |
| 103.7 | 105.9 | |
| 104 | 106.3 | |
| 104.2 | 106.7 | |
| 106.2 | 109 | |
| 106.2 | 109.4 | |
| 106.8 | 110.5 | |
| 104.9 | 107.8 | |
| 108.3 | 113.3 | |
| 108.6 | 113.5 | |
| 108.9 | 113.6 | |
| 106.6 | 111.5 | |
| 106.3 | 110.4 | |
| 109.6 | 115.4 | |
| 110 | 115.7 | |
| 110.7 | 117.4 | |
| 111.9 | 119.7 | |
| 112.9 | 121.4 | |
| 113.6 | 122.6 | |
| 113.2 | 121.7 | |
| 113.4 | 122.3 | |
| 113.6 | 122.6 | |
| 112.5 | 120.8 | |
| 112.7 | 120.5 | |
| 113.7 | 121.7 | |
| 114.1 | 122.2 | |
| 114.7 | 123.4 | |
| 115 | 124.2 | |
| 116.2 | 126.3 |
A money-market reserve is not a protective option: it does not automatically pay out more when equities fall. Its value lies in less exposed capital and the ability to meet a need without immediately selling equities. The fund itself is not a guaranteed bank deposit. [3]
The issuer’s report describes synthetic replication of €STR. Its collateral securities basket may include equities; that basket should not be confused with the intended exposure after derivatives are accounted for. The fund documents describe counterparty and operational risks associated with this structure. [3]
A reserve available for spending and one available for rebalancing have different uses. Reinvesting the entire reserve after an initial decline leaves less liquidity during a prolonged downturn. That tradeoff depends on the timing of expenses, regardless of whether the market subsequently recovers.
Diversification: two functions, with growth still driven by World
The equity allocation retains World’s concentrations. On 30 September 2026, the index holds 72.94% in US equities and 31.78% in information technology. Adding money-market exposure lowers these weights in the overall portfolio without changing the composition of the equity allocation. [1]
The model counts 2 growth sources, but only World contributes expected growth above the money-market baseline. Stopping that driver leaves no excess growth. The D includes limited credit for the broad equity core; incomplete sector look-through prevents the stronger allowance applied to World alone. This also shows a limit of the grade: it combines growth independence with composition evidence, rather than ranking the reserve’s usefulness for spending.
The reserve can reduce losses and the need for an equity sale while leaving long-term growth dependent on the same companies. Returns above the cash baseline require another economic driver, with its own risks, costs and liquidity constraints. The reserve’s loss-reducing role alone does not establish independent growth.
The overall C balances very low fees and a smaller crisis loss against lower expected growth and continued dependence on World. The reserve has a clear job, but improves loss tolerance more than independence of returns. Its role depends on the spending and rebalancing it might fund; any separate source of growth has different evidence, costs and liquidity constraints.
Other portfolios
Method and limitations
Calculated by copio on 23 October 2026, using engine portfolio-score-v10. The active forward-looking assumptions are labelled “Copio CMA”, without a vintage in the capture. Prices, holdings and assumptions may refer to different dates. Results describe an illustrative allocation without personal contributions or individual tax. No holding is excluded from the historical comparison; 0% of the history is filled with asset-class series. The engine reports missing economic composition for the money-market holding, which is handled by category, and incomplete underlying history. Those warnings coexist with a final historical comparison that excludes no holding and needs no asset-class reconstruction; they are not hidden.
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
- MSCI World Index factsheet ↗Reference date:
Country, sector and company weights in the index. These describe economic exposure, not the legal holdings of a synthetic ETF.
- ECB: the euro short-term rate (€STR) ↗Reference date:
Consulted on this date. €STR measures wholesale unsecured overnight borrowing costs for euro-area banks. It does not promise a long-term return.
- Amundi Smart Overnight Return fund report ↗Reference date:
The objective is synthetic replication of €STR. The securities basket shown before derivatives is not the fund’s intended economic exposure. This issuer URL may subsequently serve a newer report.