Backtest is a website that allows you to analyse a portfolio of ETFs based on past performance. Unlike many other tools that are aimed at US investors, we built Backtest specifically for the European index investor. All data is in euro and one can only analyse funds that are available in Europe. The tool is available to everyone free of charge at

In this article, we would like to let you discover Backtest by analysing, as an example, the historical evolution of two portfolios of index funds. We will specifically measure the effect of bonds in a portfolio, with the aim of gaining new insights that may be important for investors.

Past results are no guarantee for the future

Every investor has read this sentence in some disclaimer or other. However, this sentence is often misinterpreted and people conclude that the analysis of the past is completely useless. In the world of investment, the past is indeed no guarantee of what the future will look like. Nevertheless, we are convinced that it can give us interesting insights, which in turn are important when we make projections about the future, albeit with a dose of uncertainty.

Analysis of a simple portfolio: 100% IWDA

The first portfolio we look at consists of one fund, iShares Core MSCI World (IWDA). This is a popular ETF that tracks the MSCI World index, a broad index of over 1,500 stocks from developed markets.

Firstly, Backtest allows us to look at the evolution of a hypothetical amount (in this case €10,000) that we would have invested in the fund in January 1979. As an alert reader, you may wonder how this is possible, given that IWDA has only been in existence since 2009. Well, Backtest uses the data of the underlying index, also taking into account the costs of the fund.

The evolution of IWDA between 1979 and 2021
The evolution of IWDA between 1979 and 2021 (source: Backtest)

In this example, our €10,000 has grown to €913,181 after 43 years, or an average annual return of 11.1%. The standard deviation of the annual returns is 14.9%. What do we learn from this? Firstly, that the equity market in developed countries has risen significantly over the past 40 years, and that you did not have to use complex investment strategies to profit from this: a simple tracker was enough.

But the evolution over time does not really tell us much apart from the final return. For example, the standard deviation is an interesting figure for statistical analysis, but it is difficult to get an intuition of what a standard deviation of 14.9% actually means in terms of the size of the fluctuations of our portfolio.

Moreover, the standard deviation assumes that returns are distributed according to the normal distribution. Practice, however, teaches us that this is not the case. In particular, extreme events, i.e. exceptionally low or high returns, occur in reality much more frequently than predicted by the normal distribution.

For these reasons, the standard deviation is not the ideal metric to get a feel for the volatility of our portfolio. Rather, we look at the histogram of monthly returns:

Histogram of IWDA monthly returns between 1979 and 2021
Histogram of IWDA monthly returns between 1979 and 2021 (source: Backtest)

We group the monthly returns in different tranches: between -5% and 0%, between 0% and 5%, etc... We then count the number of months in each bracket. From this we can deduce, for example, that there were 260 months with a return between 0% and 5%.

The extremes are more remarkable. The worst month in our period was October 1987, with a fall of 17.6%. In addition, there were 7 months with returns between -15% and -10%.

With this histogram, we can gain a more concrete insight into the extent of the fluctuations over time. It is particularly interesting to ask yourself what you would have done during the months with extremely low returns. Would you have sold in panic if your portfolio had fallen by nearly 18% in one month? Would you have left your investments where they were? Would you have bought more?

This is one of the most important questions an investor can ask. Investing when markets are rising is easy. It is during a sudden crash that you are really tested. Only then do you run the risk of selling at the worst possible moment and wiping out all your gains of recent years.

For some, therefore, it may be better to sacrifice a little return and invest in a portfolio that experiences less extreme fluctuations. Bonds are one way to do this. And with Backtest we can analyse the impact of bonds on our portfolio.

The impact of bonds

Let us compare IWDA with a European variant of the well-known 60/40 portfolio, namely a composition of 60% IWDA and 40% FSBL, a fund that follows the "FTSE World Government Bond - Developed Markets (Hedged EUR)" index. This index consists of government bonds of developed countries and is hedged to the euro to avoid currency risk.

Using Backtest, we can easily compare the evolution of the two portfolios:

Comparison of the two portfolios between 1985 and 2021 (source: Backtest)

As one would expect, the long-term return of IWDA (blue, composed of equities only) is higher than the portfolio with 60% equities and 40% bonds (red). But we can also see that IWDA goes up and down more sharply (higher volatility), especially during the dotcom boom and crash at the turn of the century and the financial crisis of 2008. This difference in volatility is even more evident in the histograms of monthly returns:

Comparison of the histograms of monthly returns (source: Backtest)

Our bond portfolio experienced less extreme returns, both negative and positive. The 17.6% IWDA decline in October 1987 became "only" a 10.1% decline for the bond portfolio (60% IWDA, 40% FSBL). And during the 43 years there was only one month with a return lower than -10%, while IWDA had seven. These softer declines may well mean the crucial difference between selling everything in a panic and investing quietly.

What else you can do with Backtest

IWDA and DBZB are just two of more than 740 ETFs that you can use to build portfolios in Backtest. You can also do various analyses, such as:

  • Through recurring investments, you can simulate monthly contributions, comparing, for example, a dollar-cost averaging strategy with lump-sum investing.
  • You can include the impact of brokerage costs in the simulation.
  • It is possible to simulate and compare different rebalancing strategies.
  • The drawdown analysis allows you to measure the depth and length of recessions in your portfolio.
  • Using the efficient frontier, you can see where your portfolio is on the yield/risk spectrum.
  • Monte-Carlo simulations allow you to simulate future scenarios.

Each analysis offers a different perspective on your portfolio, contributing to a holistic understanding.

IWDA drawdown
IWDA drawdown (source: Backtest)
Efficient frontier analysis of IWDA and DBZB
Efficient frontier analysis of IWDA and DBZB (source: Backtest)

How Backtest came about

Curvo co-founder Yoran originally built Backtest to answer certain questions about his own portfolio. He had built my portfolio of ETFs based on books and other advice. But nobody could tell him how my portfolio had behaved in the past. Afterwards, he wondered when and how he could best rebalance his portfolio. Perhaps he could also answer this question with Backtest! With each additional question, he expanded Backtest into the tool that it is today.

The future of Backtest

Backtest is free to anyone and focuses specifically on the European index investor. It is now part of Curvo, the startup that Yoran set up with Thomas Ketchell.

At Curvo, we are concerned about our financial future. And we are not alone: this problem affects every one of our generation, the millennials and Gen-Z. We believe that passive investing offers a way out and is an important tool to secure our future by allowing everyone to enjoy the growth of our global economy. So our mission is to make passive investing accessible to our generation.

We do this through the Curvo app, with which Belgian young people can invest monthly in a portfolio of index funds that suits them best in a very accessible way. But also with Backtest, with which we help the do-it-yourself investor to analyse and construct their portfolio. For more information about the Curvo app and our mission, please go here.

Try out Backtest yourself!

The next step is to try out Backtest for yourself. Go to on your laptop or computer. You can create your own portfolio or analyse one of the sample portfolios. We are always interested in getting feedback to improve the tool, so feel free to send an email to