Thanks for this eye-opener. However, in my view it is 1) not eye-opening enough, and 2) insufficient solutions are proposed:

1) A Japanese scenario of more than 3 decades (!) of decline without end is currently considered even as a rather optimistic scenario for our financial future worldwide! Thus, constructing a long-term investment strategy, only considering safe, liquid securities for just 5 meager years I would not consider prudent.

2) Also the other three proposed bond solutions are not really helpful. This is mainly because they just have low correlations to the economy during normal times but may suffer from significantly increased correlations during harsh times.

Already in March all traditional crisis hedges, such as bonds, commodities and even gold had unexpected high correlations to the market. Because everything was sold what could be sold due to a natural catastrophe, unexpectedly causing the most abrupt crash and liquidity crisis ever! Thus, suggesting catastrophe bonds after this experience is "interesting".

I think only really non- and during crisis declines anti-correlated Liquid Alternatives (LAs), which nevertheless provide high equity-like returns in the long run, no matter if markets go up or down for decades, can be valid solutions for such unconventional problems.

Purely traditional Time-Series Momentum or Trend-Following Managed Futures (TSM/TF MFs) uniquely fulfill both requirements. Because they directly exploit the most reliant and yielding alternative return source. This is momentum due to innate herding behavior among other behavioral biases and institutional dysfunctionalities. It dominates price formation more than any other effect, no matter what market conditions, as can be seen in Japan.

Thus, the relevant SG Trend Index rose almost 2% in March. Unfortunately, this index of investable TF CTAs is not yet available as index funds or ETFs. But a few mutual funds of its constituents or the like will just do fine.

Simply allocating non- or anti-correlated pure TF MFs and purely passive equity index funds/ETFs already provide for optimal diversification to excel in any market condition. But beware of "anti-diversification" through Relative Value or Multi-strategies mixed in, similar to ETFs tweaked with Smart Beta. Both disimprovements increase correlations to each other.

This trend-following strategy is well-grounded in MIT professor Andrew Lo’s Adaptive Markets Hypothesis. A comprehensive introduction to it can be found in the outstanding textbook by Alex Greyserman and Kathryn M. Kaminski, reviewed here already in 2015:
www.cfainstitute.org/en/research/financial-analysts-journal/2015/trend-…