Q3 2026: Satisfactory performance despite a small bonds disaster
By Editor on October 5, 2026
Where we are
This is the first update on my retirement portfolio, covering Q3 of 2026. New here? This 8-post series explains how the portfolio is built.
I am not quite finished building the portfolio, but I am getting there: 80% is done. It’s now close to its final state, so this is a good moment to check how I am doing. It also helps me prepare for rebalancing at the end of the year.
So, let’s see what happened in July, August and September. How was my asset allocation changed?
The numbers
| Category | Target | End Q3 | Deviation |
|---|---|---|---|
| Dividend & Value Stocks | 45.00% | 45.38% | +0.84% |
| Market Stocks | 30.00% | 30.21% | +0.70% |
| Long Term Bonds | 10.00% | 9.50% | -5.00% |
| Cash Equivalents | 10.00% | 9.83% | -1.72% |
| Gold | 5.00% | 5.08% | +1.56% |
| Total | 100.00% | 100.00% |
Table: Allocation at the end of Q3 2026
Deviations are relative to the target allocation. Now for the portfolio returns.
| Period | Return (EUR) |
|---|---|
| July | -0.3% |
| August | 1.9% |
| September | 0.6% |
| Q3 | 2.2% |
| Year to date | 17.2% |
Table: Portfolio returns in Q3 2026 and YTD - Data from EuroFolio
NB. EuroFolio assumes that distributions are automatically reinvested at the payment date. This makes comparison between distributing and accumulating funds straightforward.
A performance of around 2.2% is fine.
What I did in Q3
Selling and buying funds as part of the conversion to my target portfolio. This should be finished in October.
Income
I did not take any income. That will start at the end of Q4, provided returns are adequate.
Rebalancing check
The only remarkable, or “worrying” might be more appropriate, category is Long Term Bonds. A 5% deviation in a single quarter is a lot. Here is a closer look at the components in that category.
| ISIN | Name | Deviation |
|---|---|---|
| IE00B3F81R35 | iShares Core EUR Corporate Bond UCITS | -4.51% |
| IE00B9M6RS56 | iShares J.P. Morgan $ EM Bond EUR Hedged UCITS | -7.30% |
| IE00BZ163L38 | Vanguard USD Emerging Markets Government Bond UCITS | -3.63% |
Table: Long Term Bonds
Definitely a troubling trend.
What moved the numbers
- Bonds were under fire. Yields were up in all major markets and nobody seems sure how high they can go. This explains the drop in my bonds. I did receive distributions from all three in Q3, about 1.5% of their value. Compared to the loss in value, just a thin layer of honey around a bitter pill.
- My hedged J.P. Morgan EM bond fund suffered the most. This fund missed out on the tailwind of a strong USD and took the full hit of rising yields.
- Stocks did well, in spite of everything going on.
- Xtrackers MSCI World Value UCITS 1C (IE00BL25JM42) performed admirably in Q3. It was up around 3.6%. The reason? Micron Technology is over 16% in this fund. It makes you wonder a bit about the “Value” label, but for now the AI boom really helps the returns.
- Gold looks uneventful, but it most certainly was not. Take a look at the chart below. The source is the World Gold Council. As you can see, there were some really wild swings before it ended the quarter higher.
What is next?
Finishing the conversion is priority one.
I will also take a closer look at the hedged EM bond fund. I split my EM bonds into hedged and unhedged to get a bit more EUR exposure, but is the cure worse than the disease in this case? I am only a few months in, yet I feel I should put this fund on probation.
Thanks for your interest!
Disclaimer: this is my own portfolio and these are my own choices, not investment advice. What works for me may not suit your situation, so do your own research or talk to a financial advisor before you invest. Past performance says nothing about future returns.