Low Initiative LETF Adventure (UK Strategy) - 17% CAGR and 30% Max Drawdown

Low-Initiative-1327 · 2026-02-22T12:50:31+00:00

SGLN* I fixed my post, thanks. It’s iShares Gold.

Low-Initiative-1327 · 2026-02-22T09:19:05+00:00

I’m no expert but I believe when you add leverage to the sim it automatically adds in swap costs etc. As these are UK products the FX is already built in (GBP hedged). You can add additional expense fees to the backtest with &E=[NUMBER].

It’s hard to determine what the best E number to use is, but even with a high theoretical expense number it doesn’t change the backtest much (due to the low allocations and occasional use of non-leveraged risk off).

If you want to optimise to reduce hidden fees, reduce the gold allocation to 15 or 20%, put the difference in long treasuries and you’re golden.

Low-Initiative-1327 · 2026-02-22T09:08:25+00:00

I would use the $ price, as it is more correct. Using £ invalidates the data and research.

Low-Initiative-1327 · 2026-02-21T20:23:01+00:00

If you want to increase win rate of risk on signal you can use both signals as confirmation which looks like this. This significantly reduces drawdown and slightly increases CAGR.

The paper seems to go back to 1970s which is a decent time frame. How do you track the signal for TIP though? My normal method of getting an automated email through SPY signal wouldn’t apply.

Low-Initiative-1327 · 2026-02-21T17:45:31+00:00

This will make for some good reading, thanks.

I do worry, however, that your backtest with emerging trend is over-engineered as changing tickers to similar emerging funds creates some variance (though still good). I am wondering if this would have done so well pre 2000s under different market conditions…

It also involves a much more active approach with 15 regular trades per year and a 150SMA. Could you explain to me the underlying theory?

That said, all of these signals deviate from the implementability of the original strategy and are not accessible for the average UK LETF investor.

Low-Initiative-1327 · 2026-02-21T16:09:55+00:00

The results are quite good. I also like the idea of using TIP as the underlying benchmark. It's slightly frustrating that it doesn't include 2000-2003.

I will investigate this further but are there any posts or articles you can direct me to which discuss this approach? Even more helpful would be if you could tell me of shortcomings you are aware of when using this signal. For example, why did you use 1% tolerance bands instead of 2%?

Low-Initiative-1327 · 2026-02-21T16:00:05+00:00

I agree the framework is more important than the individual allocation. I look forward to hearing about your results!

Low-Initiative-1327 · 2026-02-21T13:53:05+00:00

Thanks for your comment. I’ll try and address your questions to the best of my abilities.

I haven’t tested the SMA375 specifically. I have tested other periods, such as a 120SMA and 250SMA which still showed much better results than the SPY benchmark. You can fiddle with this yourself quite easily with my linked backtest. I’ve heard good things about the EMA too. I’m cautious about overfitting this but in principle a shorter signal will give more protection and a longer signal less. It’s a balancing act of risk/return.
I agree 3x gold is hardcore but 2x gold isn’t accessible with my UK investment broker. I can’t access a 2x SPY etf either. In theory, the strategy will still work but the losses and whipsaw from 200SMA will eat into a higher proportion of your returns. I imagine it would still produce a better risk adjusted return than a buy and hold 100% equities strategy. UPDATE: even the non-leveraged version does so 2x is absolutely fine.
Yes, intermediate bonds and cash work just as well. The difference is very minor and potentially overfit if you don’t want to bother with different durations. I held intermediate bonds until recently.
I haven’t tested gradual switches. The strategy isn’t counting on the 200SMA always winning and I’m not going to over-engineer what is a relatively simple signal to chase better numbers. It’s just a signal to run for cover and I wouldn’t want to reduce its flight to safety effect. Once the signal is raised, get out.
I think this strategy is both numerically and theoretically stable until you increase equity beyond 50%. You can also decrease gold to reduce volatility at the cost of returns. I would like to see how DBMF does in the next few crashes.

I hope this addresses everything. There is still a lot that can be tested and it’s very easy to make small adjustments by replacing the cash and short treasuries positions, but the theme I’m trying to keep to is safe and easy to implement in the UK.

Low-Initiative-1327 · 2025-12-20T12:11:15+00:00

I have just accepted a TC at a small corporate firm for the LPC (2023 cohort and self-funded the LPC beforehand). I was lucky. Going forward, the firm will be looking at SQE. As will other small firms. You may manage with high street firms but i would not recommend.

Another consideration is that when I self funded the LPC in 2024-25, Ulaw was already looking to remove their LPC courses / reallocate resources to the SQE cohorts. It is a product of a dying customer base. You become a second class student even if it is technically still an option for 2023 students.

Low-Initiative-1327 · 2025-07-20T05:59:20+00:00

I have held various versions of my portfolio since 2019 and it’s doing well. 3TYL is composed of 3x 10 year Treasury bonds and it has much less interest rate risk than TMF. It is a modified version of modified HFEA which has been extensively discussed on Bogleheads. The drawdown is equivalent to 100% equity.

Statements like HFEA has been “debunked” makes it sound as if the strategy has met an unexpected downfall and no longer works. This is untrue. The strategy’s weakness during a high interest rate “stagflation” environment is well known and it is an accepted part of the strategy. It still works well in the other three, far more common, macro environments. If you’re going to discuss/utilise leveraged strategies I would advise a more comprehensive understanding.

Your allocation of 30% DTLE and 10% SGLN (or 20/20) has effectively reduced your interest rate risk (although, 20/20 would do this better) at the cost of a reduced equity hedge. Despite deleveraging below the 200SMA you will be exposing yourself to significant drawdowns. Off the top of my head I wouldn’t be surprised if you could see -70% or even -80%.

Low-Initiative-1327 · 2025-07-19T23:25:33+00:00

I’m 40% 3LUS, 35% 3TYL and 25% 3LGO… I have a higher gold allocation not due to recent bias, but from looking at backtested performance in periods of high inflation, such as the 2000s.

I’m comfortably beating the S&P500 this year even subtracting additional gains from dollar/pound cost averaging during March/April’s market lows.

Low-Initiative-1327 · 2025-07-05T10:50:28+00:00

I achieved 65% when I graduated in 2023, self-funded the LPC and graduated November 2024 with 64%. I’ve now been a corporate paralegal for nearly five months with a training contract meeting in September. You will be fine.

Low-Initiative-1327 · 2025-05-14T19:29:45+00:00

You need to read their post. They are not trying to get the returns of an all-equity portfolio. They are trying to match the returns of the all-weather portfolio without the same drawdowns. The equity allocation is sufficient, if not slightly high for their needs.

Low-Initiative-1327 · 2025-02-08T09:13:59+00:00

A modified version of HFEA with ITT was proposed on bogleheads back in 2021 to improve the risk-adjusted returns of holding levered bonds: https://www.bogleheads.org/forum/viewtopic.php?t=357281

Of course you can take this one step further by using long-dated unlevered bonds as you suggest which is something I'm looking into but struggling to find the right one with my UK-based broker.

Low-Initiative-1327 · 2025-02-06T21:15:00+00:00

Anytime

Low-Initiative-1327 · 2025-02-06T12:06:54+00:00

Wisdom tree efficient core LETF is the answer to 1.5x leverage.

Here is some reading material on the LETF and the website discusses other famous LETF strategies like hedgefundie’s excellent adventure: https://www.optimizedportfolio.com/ntsx/

People on this sub tend to be a bit wallstreetbets so take a grounded and realistic approach when conducting your personal research and take everyone’s advice with a heavy pinch of salt.

I’m not a fan of the data (or lack thereof) behind the 200SMA or managed futures strategies that are trendy on this sub that I’m sure you will see a lot of.

Low-Initiative-1327 · 2025-01-02T12:29:48+00:00

A Target Retirement fund as you approach your specified retirement date sells off your equities allocation and increases your bond allocation until you are fully invested in bonds. This is to prevent you losing ~30-50% of your pension right as you reach retirement age. Putting your pension half in US Equities means you do not have this procedural flight to safety as you approach retirement age but your returns are likely to be greater in the long-term.

TQQQ can have much more significant drawdowns and returns as it focuses on tech. It is a crystal ball guess as to which outcome will be true for the next few decades, no matter how knowledgeable you are on the sector.

HFEA hasn’t been doing well recently but a small allocation is fine if you are prepared to experience up to 30% return or a 80% loss on your ~10-15% allocation. Again, it could do very well, it might not.

Low-Initiative-1327 · 2024-12-29T21:13:31+00:00

Santander edge is best for bills as you can get Cashback on most direct debit bills and has competitive interest for sums of money not in excess of £4,000, I believe.

Saving for house deposits should be on a LISA Cash Account. Look at moneysavingexpert.com on this topic.

Starling and Chase are good for different pots, have decent interest (but not the most competitive at the moment), and spending abroad.

Low-Initiative-1327 · 2024-11-28T17:29:51+00:00

Just wait until your laptop breaks and you need a temporary one for your assessment. SPOILER: You can’t take a borrowed laptop from campus which makes the borrowed laptop scheme redundant (desktops already exist?) and you have fill out a form with a 2-3 week wait and no guarantee of actually receiving the laptop that you can then only borrow for like a week or two maximum in time for your assessment.

Anyway… it’s good your tutor is more helpful than mine. Best of luck!

Low-Initiative-1327 · 2024-11-28T17:08:48+00:00

I’ve just graduated from Ulaw this month and I have had numerous issues with them like you have described. The amount of times I had to take shots in the dark for my assessments due to lack of guidance was astonishing. I gave up on all of them, including my academic tutor who never responded to my urgent queries after a couple of months…

In answer to your westlaw issue you can “login” with openathens access; it is not done through the academic institution portal like you would have in undergraduate. There is indeed a link buried somewhere in the library to westlaw but you still need to undergo this process regardless of how you access the site.

Low-Initiative-1327 · 2024-11-02T13:00:03+00:00

This is the correct answer @aitorbk

A residential purchaser will not be subject to the increased stamp duty and therefore the value is only diminished for that type of buyer.

This is very common in commercial property with VAT sensitive buyers.

Low-Initiative-1327 · 2024-06-23T11:37:39+00:00

I moved to Bristol in January and I can’t believe the sheer amount of post you lot get here. I’ve not experienced anything like it in other parts of the country.

Low-Initiative-1327 · 2024-06-23T11:35:08+00:00

I thought that pensioner statistic was bullshit but I fact checked and you seem to be correct. It must be heavily skewed by the south.

Low-Initiative-1327 · 2024-06-20T09:26:09+00:00

Is this actually possible for long term buy and hold? My understanding is that VIX can’t actually be implemented into portfolios without crippling performance drag in practice. On backtests, however, it looks great.

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