Methodology
How the portfolios are built, tested, and costed. Plain English, no proprietary detail.
The portfolios
Three portfolios, each holding up to ten investments alongside a starting anchor:
- US (S&P 500 anchor). Designed to deliver better risk-adjusted returns than holding the S&P 500 alone.
- UK (FTSE 100 anchor). Same idea, with the FTSE 100 as the starting point.
- Global Best-Ideas (no fixed anchor). Picks the strongest available assets each week. Benchmarked against the S&P 500 — typically the hardest passive benchmark to beat in GBP terms.
The universe
The investment universe is around 778 instruments tradable in a Hargreaves Lansdown S&S ISA. It covers UK and global ETFs (Vanguard, iShares, Invesco, Xtrackers, WisdomTree, SPDR), commodity ETCs (gold, silver, oil, agricultural baskets, individual softs/metals), single stocks from the S&P 500 / FTSE 100 / FTSE 250 / EuroStoxx 50, US-listed ADRs of major Asian and Latin American companies, UK investment trusts (multi-asset, infrastructure, private equity, renewables), bond ETFs across geographies and durations, and a small number of crypto and hedge-fund-style ETPs.
An asset is only considered once it has at least 10 years of price history — this ensures every estimation uses a long, stable sample rather than relying on freshly-listed funds.
Walk-forward, out-of-sample
The performance shown is out-of-sample by construction. At every rebalance point the portfolio is built using only data that was available before that date. The next week's returns are then earned on those weights with no further intervention. This is the strictest backtest design — it simulates exactly what an investor would have experienced in real time, with no hindsight.
The track record runs from January 2019 to May 2026 (7.4 years) — the earliest date at which the anchor (and a meaningful sub-universe of diversifiers) had built up a full 10-year history.
Rebalancing
Portfolios are rebalanced weekly on the first trading day of each week (typically Monday). Trades are assumed to execute at that day's closing price. This gives an investor a full trading session to place orders during normal UK market hours. Between rebalances the weights drift naturally with market moves and are not touched.
A small drift filter avoids tiny trades: if a position has not drifted more than 5 percentage points from its new target, it is held rather than nudged back into line. This applies to every type of holding (ETFs, ETCs and shares) and meaningfully reduces dealing fees, stamp duty and FX cost.
Costs (Hargreaves Lansdown rates)
Every cost an investor would actually pay is deducted from the equity curve, using HL's published rates for a Stocks & Shares ISA. No costs are hidden, smoothed, or netted off elsewhere.
| Cost | Rate | When charged |
|---|---|---|
| ETF / share dealing fee | £11.95 per trade | On every buy and sell of an ETF or stock (reduces to £5.95 if you traded 10+ times the previous month) |
| UK stamp duty (shares only) | 0.5% | On every purchase of a UK-listed single stock. ETFs and ETCs are exempt |
| FX cost (non-GBP assets) | ~1.00% | On every trade of a USD or EUR denominated asset. HL's retail-tier sliding scale; 1% is the worst-case used here |
| Bid-offer spread (ETFs) | ~5 bps per side | Embedded in execution price on every ETF buy and sell |
| HL platform fee (S&S ISA) | 0.45% annually | Accrued daily on the AUM. ETFs are capped at £45/yr; OEIC funds and shares are uncapped |
| Underlying fund OCF | Varies by fund | Accrued daily — passed through directly from each fund's published Ongoing Charges Figure |
At the default initial investment of £20,000, total fee drag works out to roughly 50–110 basis points per year depending on the product (less for low-turnover anchored portfolios; more for trades that include UK shares with stamp duty).
What is not modelled
The backtest is a fair simulation but the following real-world frictions are not included. A live investor would experience them and should expect realised returns to fall short of the backtest by some amount as a result.
- Execution slippage. Trades are assumed to fill at the day's closing price. A real order may move the market against you, especially for smaller AUM positions in illiquid trusts.
- Cash-flow timing. No model of contributions, withdrawals, or cash-drag from settlement delays (T+2, FX settlement).
- Tax events outside the ISA wrapper. Inside an ISA, gains and dividends are tax-free. Outside an ISA, CGT and dividend tax would apply and reduce realised performance.
- Broker outages or order rejections. A weekly rebalance assumes the trade actually executed on the intended day; in practice this could slip.
- Survivorship bias in the universe. Instruments that have delisted or merged are absent from the candidate set. The current universe is the survivor set.
- Dividend reinvestment and withholding tax. Total-return proxies are used where available; some single stocks are price-only and so understate true total return.
Important reminders
This material is an academic research project and is published for general information and educational purposes only. It does not constitute investment advice, a financial promotion, or a recommendation to buy, sell, or hold any security. The hypothetical performance shown has not been achieved by any real investor. Past performance is not a reliable indicator of future returns. Capital is at risk. The value of investments can fall as well as rise. Tax treatment depends on individual circumstances and may change.
This site is not authorised or regulated by the Financial Conduct Authority. If you are considering investing, please consult an independent financial adviser authorised and regulated by the FCA.