I hold both PNL and Capital Gearing. Been thinking along similar lines. Why not just hold sovereign bonds, IL bonds, cash and gold as defensive elements and cut out the middleman. Gilts can be held directly and could set up a ladder if so motivated.

I've not read the whole thread, so apologies if this has been said already.

Aside from not having to take decisions on when / what to rebalance (the risk of me getting it wrong is significantly higher than these managers messing up), holding PNL (and CGT) in an unsheltered account makes life much simpler in terms of taxation. I don't want to be triggering gains in an unpredictable way (or possibly at all).

NB I do hold Gilts and Gold separately, but the former are low coupon Gilts in lieu of savings accounts, and the latter is a core holding as I want more exposure to Gold than I get with PNL. I'd be more likely to trim it to crystallise a loss to offset gains elsewhere, than rebalance away from it.

PNL performed disappointingly during the spike in uncertainties and inflation two-three years back. Fortunately we had reduced (but not eliminated) our holdings in favour of ITPS and SGLN ETFs, which have together performed much better than PNL, mainly thanks to gold of course. But then, with ETFs in the separate sectors, an investor can shift the emphasis. It was after a decade of inferior perfomance, as I recall, that PNL added some large companies to its pf, making it Harry Browne-ish.

Back testing a strategy over a long term is all very well, but I am more interested in adapting strategy to circumstances as they unrol forwards...and one of the few advantages a retail investor has is agility/flexibility.

Edit: holdings above are in ISA so the valid point Sara makes about using PNL so as not to worry about tax on individual gains is in a different context.

Quite the opposite:

“ investment policy is to protect and increase (in that order) the value of shareholders’ funds per share”

It is explicitly wealth preservation.

I think people get this wrong.

Portfolios like PNL and CGT take more challenging paths through normal market conditions – ideally keeping up with passive equivalents. Then, once every 7-10 years, there's a big repricing they largely avoid. And 2022 was one of those.

The only difference this time was it was the bond market that needed to reprice. And take the very high quality passive equivalent – LifeStrategy 40 – and it took that repricing much more full on. Peak to trough, it had lost value over 4 years. During an opportunity to buy stocks at better prices, it was selling stocks to bonds. This is bad at the time, but misses an opportunity for better future returns too.

Bonds didn't actually lose you any wealth (they were always fixed-term investments), they just got cheaper. The only way for PNL to reliably avoid any repricing would've been to avoid duration – so effectively cash. And we don't really want these portfolios to be more than a third cash, because cash is always a loser over meaningful timeframes, and that would've been us waiting for the 'bad thing' to happen. The real achievement of PNL/CGT was avoiding these risks for years, without underperforming funds that were fully participating in them (e.g. the LifeStrategy range).

So they got this right. I don't think it could've been done any better (without an element of gambling/timing). And for that same reason, even if the event never happened, they'd have likely just kept plodding on in line with VLS40, which means this strategy is a free lunch.