UPDATE June 2021: I have now updated the stress test tool to take into account a new scenario, as described in full at the foot of this article. The new scenario looks at what would happen during a period of strong economic growth and rising inflation, but also which funds would fare better in an environment where value outperforms growth. This addition was a result of a request from an 80-20 Investor member who wanted insight into how funds that might perform well in a reflationary scenario would fare in other stressed market situations.
Investors, be they professional or DIY investors, don't give enough consideration to the downside potential of their portfolios. When engineers build a new skyscraper they don't just focus on reaching for the stars. In fact, they pay more attention to the structure's ability to remain upright. How will the structure cope in high winds or an earthquake?
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