The Recession-Ready Portfolio

The tape is telling us something.

Leading indicators are rolling over, the yield curve has been inverted longer than at any point since the early 1980s, and the cap-weighted index is increasingly a bet on seven names. That is not an argument for panic. It is an argument for preparation.

This portfolio is constructed for the household that wants to stay invested through a drawdown without being forced to sell — the household that would rather accept a lower ceiling in exchange for a higher floor. It is not a market-timing vehicle. It is a multi-year construction with three jobs: generate income, preserve purchasing power, and hold its ground when the benchmark does not.

We hold 55% in quality dividend equities biased toward consumer staples, healthcare, utilities, and mature energy — segments with pricing power and contractual cash flows. We hold 25% across intermediate and long duration treasuries and investment-grade credit, positioned to benefit from the rate-cut cycle the Fed has signaled. We hold 20% in alternatives — gold, TIPS, infrastructure, and a measured credit tilt — as insurance against both inflation surprise and liquidity stress.

Three reasons to de-risk now, not after the fact.

Thesis 01

Concentration risk is the story of 2026.

Seven stocks account for over 30% of the S&P 500. The cap-weighted index has become an implicit active bet on a single theme. Equal-weight and quality-dividend exposures re-diversify the allocation without leaving the asset class.

Thesis 02

Duration is cheap insurance.

With policy rates above 5% and inflation heading toward target, bonds offer both carry and convexity. In a recession, duration is the asset that covers the equity drawdown — and this time, you are paid to own it.

Thesis 03

Real assets hedge the tails.

Gold, TIPS, and infrastructure address what rates and equities cannot: a sticky-inflation surprise, a currency event, or a liquidity freeze. We hold them in size — not as alpha, but as insurance.

The shape of the book.

Quality Equity

55%

Fixed Income

25%

Real Assets

12%

Private Credit

Cash & Equiv.

The 55/25/20 rule, adjusted for cycle.

We are not benchmark huggers. A recession-ready book sits meaningfully below a traditional 70/30 and biases equity away from the cap-weighted index toward dividend-payers and defensive sectors.

Intended for clients with a 5 to 15-year horizon, moderate-to-moderate-conservative risk tolerance, and an income need ranging from 3% to 5% annually.

What we own. Why we own it.

Target Holdings & Sleeve Rationale

As of April 20, 2026

Holding	Rationale	Weight
Quality Dividend Equity · 55%
PDI PIMCO Dynamic Income Fund 13.5% yieldMonthly Actively managed multi-sector credit with downside protection mandate. Flagship income sleeve.	Flagship income generator. Manager discretion over credit quality, duration, and currency provides ballast through spread-widening events.	8%
ARCC Ares Capital Corp. 8.55% yieldQuarterly Largest public BDC. Senior secured private credit, well-diversified borrower book.	Floating-rate income from middle-market credit — negatively correlated with duration, a natural hedge to the bond sleeve.	5%
O Realty Income Corp. 5.65% yieldMonthly Triple-net lease REIT. Contractual rents across 15,000+ properties.	Defensive real-estate exposure with investment-grade tenant base. Monthly dividend cadence aligns with retiree withdrawal needs.	5%
VZ Verizon Communications 5.65% yieldQuarterly Wireless telecom duopolist. Essential service with pricing power.	Classic recession hedge. Subscription revenue model; dividend continuity through the last three downturns.	5%
ET Energy Transfer 6.80% yieldQuarterly Midstream MLP. Fee-based cash flows, commodity-agnostic pipeline contracts.	Toll-road economics on US energy infrastructure. Tax-deferred yield through unit basis mechanics (consult advisor on K-1 reporting).	5%
LMT Lockheed Martin 2.55% yieldQuarterly Defense prime contractor. NATO re-armament tailwind.	Counter-cyclical geopolitical exposure. Multi-decade order book insulated from consumer demand cycles.	4%
NTR Nutrien 4.20% yieldQuarterly Global fertilizer producer. Counter-cyclical to discretionary goods.	Food-security thematic. Demand remains inelastic through GDP contractions; dividend sustainable through the commodity cycle.	3%
BRK.B Berkshire Hathaway No dividendCash-rich The ultimate defensive posture. $325B+ in cash awaiting dislocation.	Dry-powder proxy. Capital allocator positioned to buy distress at the bottom of the cycle; effectively a call option on volatility.	10%
SCHD Schwab US Dividend Equity ETF 3.50% yieldQuarterly Dow Jones 100 Dividend Index. Quality-screened, low-cost core.	Diversified dividend-growth sleeve. Equal-weight screening filters out dividend traps; 0.06% expense ratio.	10%
Fixed Income · 25%
VGLT Vanguard Long-Term Treasury ETF 4.20% yieldDuration play Long-duration treasuries. Highest convexity to rate cuts.	Recession hedge. Negatively correlated with equity drawdowns; structural beneficiary of the rate-cut cycle.	10%
TIP iShares TIPS Bond ETF 2.80% real yieldQuarterly Treasury Inflation-Protected Securities.	Inflation insurance. Principal adjusted to CPI; real-yield lock-in at attractive starting levels.	8%
LQD iShares IG Corporate Bond 4.80% yieldMonthly Investment-grade corporate credit. Intermediate duration.	Spread income from high-quality issuers. Selected for liquidity and rating-agency discipline over yield reach.	7%
Real Assets · 12%
NEM Newmont Corp. No dividendGrowth Largest public gold miner. Leveraged to gold moves above $3,500/oz.	Equity proxy for gold. Operating leverage to metal price provides asymmetric upside to a currency or geopolitical shock.	4%
IAU iShares Gold Trust No yieldHedge Physical gold ETF. Pure commodity exposure.	The oldest hedge. Inflation protection, flight-to-quality beneficiary, and a real asset that sits outside the banking system.	5%
XLU Utilities Select Sector SPDR 3.10% yieldQuarterly Regulated utility equity. Essential service revenue.	Bond-proxy equity with regulated rate base. Defensive through recessions and AI-driven power-demand beneficiary.	3%
Cash & Equivalents · 3%
SGOV iShares 0-3 Month Treasury ETF 5.30% yieldMonthly T-bill ladder. Dry powder.	Short-duration government money. Optionality to deploy into drawdowns; higher yield than most sweep accounts.	3%

Risk Disclosure

What could go wrong.

If we are early to defense, the portfolio will underperform a rallying cap-weighted index. If rates re-accelerate on inflation stickiness, the duration sleeve will mark lower. If credit spreads widen sharply, the BDC and high-yield-proxy positions will draw down. This construction is designed to lose less, not to win every month. Clients who require full market participation should discuss a different risk tier with their advisor.

The Recession-Ready Portfolio.

The tape is telling us something.

Three reasons to de-risk now, not after the fact.

Concentration risk is the story of 2026.

Duration is cheap insurance.

Real assets hedge the tails.

The shape of the book.

The 55/25/20 rule, adjusted for cycle.

What we own. Why we own it.

Target Holdings & Sleeve Rationale

What could go wrong.

Important Disclosures

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