By Ranga Srinivasan and Ramprasad Satagopan
As financial advisors in Cupertino, CA, Everest strives to provide guidance and education on wealth management matters. We hope this article sheds some light on your questions and concerns.
At Everest, we believe that superior investment outcomes are not achieved by chasing the highest-returning investments but assembling a set of asset classes where each component plays a distinct and complementary role. In this article, we would like to revisit our thinking on strategic portfolio asset allocation, exploring how a thoughtful blend of public equities, hedge funds like managed futures, Treasury bonds, private credit, and real assets can deliver growth, income, and resilience through all market conditions.
For readers who are interested in the technical details, the following sections provide detail on why each asset class belongs in a portfolio and how they interact. For more on our investment philosophy, visit everestprivatewealth.com/what-we-do.
The Portfolio Challenge: Growth AND Protection
Many of you are familiar with the traditional 60/40 portfolio asset allocation (60% equities, 40% bonds). For decades, this blend provided both capital appreciation and downside protection. But 2022 delivered a painful reminder: when interest rates rise sharply, bonds and stocks can fall together. The S&P 500 lost approximately 18% in 2022, while the Bloomberg U.S. Aggregate Bond Index fell roughly 13%—simultaneously. Investors discovered that their “safe haven” wasn’t safe at all.
This experience, combined with the 2008 Global Financial Crisis (when the S&P 500 plummeted by 37%) reinforces a core principle at Everest: true portfolio resilience requires more than stocks and bonds. It requires asset classes with uncorrelated return drivers.
Public Equities: The Portfolio’s Growth Engine
Public equities remain the primary engine of long-term wealth compounding in any well-constructed portfolio. Over rolling 10- and 20-year periods, broad equity indices have outperformed nearly every other liquid asset class—and the past decade has been no exception.
The S&P 500 has delivered extraordinary returns since 2013, driven in no small part by the dominance of U.S. mega-cap technology companies which have become the infrastructure layer of the global economy. The emergence of generative artificial intelligence has injected a powerful new growth catalyst into the U.S. equity markets.
For long-term equity investors, maintaining a core allocation to the S&P 500 index—and by extension, the companies building and monetizing this transformation—remains as important as ever.
The Case for International Equities: Reducing U.S. Concentration Risk
While U.S. equities have led global markets for much of the past 15 years, the current geopolitical environment introduces a new and underappreciated risk: over-reliance on U.S. market supremacy. The re-emergence of global tariffs and protectionist trade policy—including broad-based import tariffs and escalating U.S.-China trade friction, strong pressure on the U.S. Dollar—creates a complex environment for many U.S. companies who derive significant revenues from overseas markets. At the same time, these same dynamics are catalyzing a powerful rotation toward international markets that had been deeply undervalued relative to U.S. equities.
Managed Futures: The Portfolio’s Crisis Alpha Engine
Managed futures (also called trend-following funds) are a less understood diversifier in portfolio asset allocation construction. This strategy uses systematic rules to go long or short across global markets (equities, bonds, currencies, and commodities) based on price trends. Their defining characteristic: they tend to perform best precisely when traditional portfolios suffer most has given rise to the moniker “crisis alpha.”
Consider the evidence:
In 2008, a catastrophic year for equities, the SG Trend Index—a benchmark for managed futures funds—returned approximately +18%. While the S&P 500 lost -37%, trend followers profited by riding sustained downtrends in equities and commodities, and by going long U.S. Treasury bonds as capital fled to safety.
In 2022, the most challenging year for bonds in a generation, managed futures delivered approximately +25%—their best year in decades. Rising inflation created sustained trends across interest rate futures (short bonds), energy markets (long commodities), and currency pairs. When both stocks and bonds fell together, trend-following strategies thrived.
This “crisis alpha” property makes managed futures a powerful portfolio stabilizer. They do not merely reduce volatility—they actively generate returns during the scenarios investors fear most. When the markets are not in crisis mode, they still generate good returns, so overall they tend to have “positive convexity.” It is hard to find asset classes that have crisis alpha and positive total returns, and thus merit a place in our portfolio asset allocation.
Private Credit: Higher Yields, Less Volatility
Post-2008 banking regulation significantly curtailed banks’ ability to lend to small and mid-sized companies. That financing gap has been filled by private credit managers—institutional lenders who provide direct loans in exchange for higher yields. Private credit has grown into a compelling income-generating asset class that we are utilizing in client portfolios.
Private credit funds typically target yields of about 5%-6% above the prevailing interest rate or SOFR, well above what is available in investment-grade or high-yield public bonds. Senior secured private credit funds—those with first-lien claims on borrower assets—offer added protection of seniority and many credits also carry protective covenants that provide additional downside protection.
Unlike publicly traded bond funds, private credit is not marked-to-market daily, which reduces portfolio volatility as well.
Private credit is not a free lunch, however; it carries the extra risk of lending to smaller companies, valuation risks in the private market as well as liquidity constraints. All that being said, Everest recommends an allocation to this asset class to improve overall portfolio performance for investors seeking extra yield bearing components in their portfolios.
Real Assets: Tax-Efficient Income Through NNN Lease Structures
Another powerful (and underutilized) income strategy for investors is through real asset funds structured around Net Lease (NNN) commercial real estate. In a triple-net lease, tenants pay property taxes, insurance, and maintenance, leaving the owner with a predictable, low-maintenance income stream. Credit-worthy tenants (pharmacies, grocery chains, fast-food franchises) typically occupy these properties under long-term leases.
The income advantage is significant: many NNN lease funds distribute 6–8% annually. But the real advantage for high-income investors lies in the tax treatment. Real estate funds generate depreciation deductions that can offset income distributions, meaning a substantial portion of the cash distributed may be classified as return of capital rather than ordinary income. For an investor in a 37% federal bracket, a 7% distribution that is 60–70% return of capital can be equivalent to an 8.5–9% pre-tax yield from a conventional bond. For our high-income earners, this after-tax efficiency is particularly valuable given high marginal tax rates.
Treasury Bonds: Still a Valuable (But Conditional) Diversifier
In 2008, intermediate-term U.S. Treasury bond funds returned approximately +14%, providing a meaningful cushion against equity losses.
However, in 2022, the shock was inflationary; rising rates hurt both stocks and bonds simultaneously and Treasuries did not provide adequate portfolio protection. The 2022 experience has led some investors to question Treasury bonds entirely. We believe this is an overreaction. Treasury bonds remain highly effective as a hedge against growth shocks—recessions, financial crises, and deflationary environments—where investors seek safety and the Federal Reserve cuts rates.
By pairing Treasury bonds with Managed Futures, we find that downside protection becomes more robust. Each hedges different risks, and together they cover a far wider range of adverse scenarios.
At Everest, our current positioning reflects a balanced view, maintaining a measured Treasury allocation for recession protection while leaning on trend-following strategies to manage inflation and rate-rise scenarios.
Historical Performance Snapshot: Diversification and Hedging in Action
| Asset Class | 2008 Return | 2022 Return | Role | Key Benefit |
| S&P 500 Index | −37% | −18% | Growth | Long-term compounding |
| Managed Futures (Trend) | +18% | +25% | Defense | Profits in trending markets |
| U.S. Treasury Bonds | +14% | −18% | Defense | 2008 equity hedge |
| Private Credit | Not available | ~+8–10% | Income | Higher-yield floating rate for inflation protection |
| NNN Lease Real Assets | Not available | ~6–8% equiv. | Tax-Efficient Income | Depreciation shield |
Sources: Bloomberg, SG Trend Index, Bloomberg U.S. Aggregate. Past performance is not indicative of future results. Private credit and real asset returns are illustrative of typical fund ranges.
The Everest Portfolio Construction Framework
Our multi-asset approach assigns each allocation a specific role:
- U.S. Equities (S&P 500 / AI Leaders): Primary growth engine; structural AI tailwind from technology infrastructure buildout and earnings cycle
- International Equities (Developed & Emerging Markets): Valuation and currency diversification
- Managed Futures (Trend Following): Crisis alpha provider; uncorrelated returns in equity bear markets and inflationary shocks
- Treasury Bonds: Recession and deflation hedge; flight-to-safety in growth crises
- Private Credit: Higher-yielding income with reduced mark-to-market volatility
- Real Assets (NNN Lease): Tax-efficient income using depreciation and return-of-capital distributions
Your Partner for Resilient Portfolio Asset Allocation
The lesson of 2008 and 2022 is that insufficient portfolio asset allocation diversification can often lead to deep losses. Investors who held only stocks and bonds experienced the full force of both crises. Those who complemented their portfolios with managed futures, private credit, and real assets navigated these environments with materially less drawdown and more stable income.
At Everest, we approach portfolio construction with the engineering rigor—data-driven, systematic, and always oriented toward long-term compounding. We build bespoke portfolios that reflect each client’s goals, tax situation, liquidity needs, and risk tolerance. For our clients, we have taken the balance sheet level planning such as tax management, integrating concentrated stock management, deferred compensation planning, and tax-efficient alternative investments into a single, coherent strategy.
If you would like to explore how these asset classes might fit into your own portfolio—or to revisit your current portfolio asset allocation in light of today’s market environment—we invite you to schedule a discovery call by contacting us at 408-502-6015 or everest@everestprivatewealth.com. Additional insights and resources are available at everestprivatewealth.com/blog.
About Ranga
Ranga Srinivasan is co-founder and principal at Everest Private Wealth, an SEC-registered wealth advisory firm based in Silicon Valley and serving clients across the United States. After graduating from the University of Cincinnati in the field of engineering, Ranga, witnessed the dot-com collapse in the early 2000s and sought to manage his own personal finances. He realized that many of the options available were unsatisfactory for a myriad of reasons. Knowing it could be done better, Everest was founded in 2007 to provide comprehensive wealth management. Ranga and the Everest team are dedicated to caring for the financial needs of the families they serve. With an emphasis on building trust and holding to the fiduciary standard of putting clients first, Ranga strives to offer financial solutions that inspire confidence.
In his free time, Ranga is passionate about staying active; you can often find him swimming, golfing, biking, and playing tennis. He also has a great love for charity and philanthropy work. To learn more about Ranga, connect with him on LinkedIn.
About Ramprasad
Ramprasad Satagopan is co-founder and principal at Everest Private Wealth, an SEC-registered wealth advisory firm based in Silicon Valley and serving clients across the United States. As a self-made, highly educated first-generation immigrant, Ramprasad became passionate about investing after witnessing the dot-com collapse in the early 2000s. He created Everest to help his peer engineering community to build household wealth in a systematic way. Everest has grown over the years while staying true to its fiduciary commitment. Ramprasad and the Everest team take pride in being a firm that brings a reputable, honest, and caring approach to all its clients.
Ramprasad graduated from both the University of Cincinnati and the University of Phoenix with a master’s degree in science and business administration, respectively. When he’s not helping families build a strong financial future, Ramprasad can be found enjoying traveling and reading. To learn more about Ramprasad, connect with him on LinkedIn.
Disclosures:
The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.
The views expressed in this commentary are subject to change based on market and other conditions. These views may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.
Investing in REITs involves certain distinct risks in addition to those risks associated with investing in the real estate industry in general. Equity REITs may be affected by changes in the value of the underlying property owned by the REITs, while mortgage REITs may be affected by the quality of credit extended. REITs are subject to heavy cash flow dependency, default by borrowers and self-liquidation. REITs, especially mortgage REITs, are also subject to interest rate risk (i.e., as interest rates rise, the value of the REIT may decline).
No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. All investments include a risk of loss that clients should be prepared to bear. The principal risks of Everest Private Wealth strategies are disclosed in the publicly available Form ADV Part 2A.
Everest Private Wealth is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Everest Management Corp. and its representatives are properly licensed or exempt from licensure.