Thanks for raising a very relevant issue. But I find two problems with your arguments:

1. You are suggesting a 20% - 25% allocation for fixed income based on a 5-year crisis and 4% - 5% withdrawal per year. This assumes that the withdrawals will be funded by liquidating the fixed-income portion of the portfolio. The problem is that this ignores any rebalancing and will ultimately lead to 100% equity portfolios. Nobody will be able to just sell fixed income for five years and not worry about the portfolio balance. In the institutional world, there are constraints against doing so.

2. The more serious problem is that you are comparing unlike returns. For US Treasuries, you are assuming a forward return of 0.6%, which may be fair given the current yield. But I don't understand how you can assume high returns of 7.0% for catastrophe bonds, 6% for private loans, and 6% for multi-strategy fixed-income funds. Given the low-yield environment, the prices of such assets will increase and the returns would dwindle. Simply put, you are assuming low returns for US Treasuries but excellent returns for these other assets.

Thanks!