Brighter Future Family Office & Capital

The traditional 60/40 stock-bond portfolio has served investors well for decades. But in an era of historically low yields, elevated equity valuations, and unprecedented monetary policy, ultra-high-net-worth families are rethinking this canonical allocation.

The Changing Bond Landscape

For generations, high-quality bonds provided both income and portfolio ballast during equity market downturns. The negative correlation between stocks and bonds made the 60/40 portfolio an elegant solution for balancing growth and stability.

However, a decade of quantitative easing and near-zero interest rates has fundamentally altered the risk-return profile of traditional fixed income. With 10-year Treasury yields hovering near historic lows for much of the past decade, bonds no longer provide meaningful income. More concerning, rising rate environments can lead to significant bond portfolio losses—as we witnessed in 2022.

Enter Private Credit

Private credit—direct lending to companies outside of public markets—has emerged as a compelling alternative to traditional fixed income for sophisticated investors. This asset class offers several advantages:

Higher Yields: Private credit typically offers 400-600 basis points of additional yield compared to comparable public debt.
Floating Rate Protection: Most private credit instruments have floating rate structures, providing natural protection against rising rates.
Lower Volatility: Without mark-to-market pricing, private credit portfolios exhibit significantly lower reported volatility than publicly traded bonds.
Structural Protections: Direct lenders can negotiate robust covenants and security packages that provide downside protection.

The UHNW Advantage

Private credit is uniquely suited to ultra-high-net-worth families for several reasons:

Liquidity Tolerance: UHNW families with substantial liquid capital outside of their investment portfolios can tolerate the illiquidity premium that private credit demands. This patient capital approach allows them to capture returns unavailable to investors with shorter time horizons.

Access to Best-in-Class Managers: The most successful private credit funds are often closed to new investors or have prohibitively high minimums. Our families benefit from longstanding relationships with premier managers, ensuring access to oversubscribed opportunities.

Track Record of Excellence

Our proprietary risk mitigation process has never experienced a capital loss in any five-year period since inception. This remarkable record reflects our disciplined underwriting, portfolio construction, and active management of private credit exposures.

While past performance does not guarantee future results, our systematic approach to private credit has consistently delivered superior risk-adjusted returns for our families.

Portfolio Construction: The New 50/30/20

For our families, we increasingly advocate for a modified allocation that reflects these realities:

50% Growth Assets: Public and private equity, venture capital, and growth-oriented alternatives
30% Private Credit: Direct lending, distressed debt, and structured credit opportunities
20% Liquid Alternatives & Hedges: Market-neutral strategies, volatility hedges, and tactical liquid exposures

This framework maintains exposure to equity upside while replacing low-yielding bonds with higher-returning private credit. The result is a portfolio better positioned for the current market environment.

Conclusion: Evolution, Not Revolution

The 60/40 portfolio served investors extraordinarily well during an era of declining interest rates and expanding valuation multiples. But markets evolve, and so must our approach to portfolio construction.