A New Way To Understand, Explain And Allocate
Alternative investments have moved from the sidelines to the mainstream of portfolio construction.
In 2025, the White House issued an Executive Order advocating for alts in the 401(k)s of 90 million American savers. In 2026, the Department of Labor proposed regulations to facilitate alts in target-date and allocation funds for these DC plans.
Unfortunately, the alts conversation has long focused on individual strategies in isolation: what each one does, not how they fit together.
The New Playbook for Alternative Investing offers a different approach: a practical framework built on the familiar language of football. Rather than treating alternatives as a separate sleeve, this framework positions them as integrated tools that can play complementary roles based on client goals and market conditions:
• Offense: growth
• Defense: income
• Special teams: diversification
• Complementary: integrated across the portfolio
This is Part 2 of a four-part series introducing the playbook.
In football, defense wins championships. While offense gets the highlights, defensive coordinators know that protecting position often determines outcomes.
Here we examine defense: income-focused strategies designed to manage risk and cushion drawdowns, from conservative Treasuries to aggressive distressed credit.
Defense Starts With Income
Defense in football should be proactive rather than reactive. It’s about controlling the opponent, protecting your field position, and setting up the next opportunity. Or even taking the ball away and adding to the score. In portfolios, defensive strategies start with income, then seek to preserve capital and provide stability when equity markets struggle.
Just as defensive coordinators call different schemes based on the situation, advisors can deploy income strategies with varying levels of conservatism or aggressiveness depending on client yield requirements and risk tolerance.
Here’s how defense works across three formations: prevent, zone or blitz.
Prevent Defense: Income And Stability From High-Quality Fixed Income
The Play: Prevent defense protects the lead. It’s conservative, designed to avoid big mistakes and run out the clock. You sacrifice some upside to ensure you don’t lose ground.
Investment Role: Core fixed income provides the ballast in a portfolio: contractual income, principal preservation, and lower volatility. It’s the defensive anchor to offset equity market uncertainty.
Assets
Treasuries: U.S. government bonds offer maximum safety and liquidity. They’re the ultimate “prevent” strategy: comparatively limited yield, but virtually no credit risk. Long duration Treasuries can also offer equity risk offset, but caution is required when rates rise, due to duration.
Investment-Grade Bonds: Corporate bonds from high-quality issuers provide incrementally higher yields while maintaining strong creditworthiness and broad diversification.
Zone Defense: Higher Income From Structured And Private Credit
The Play: Zone defense is more flexible than prevent. It covers space rather than individual threats, allowing defenders to react and adjust. It’s active, strategic, and designed to generate turnovers while still protecting the end zone.
Investment Role: Structured credit and private credit sit between traditional fixed income and mezzanine or distressed opportunities. Structured credit provides access to a wide variety of diversifying income streams. Private credit strategies can deliver higher income by lending directly to middle-market companies, often with floating-rate structures that provide some inflation protection.
Assets
Structured Credit: Structured credit involves pooling income-generating assets (such as mortgages, loans, or leases) into Special Purpose Vehicles (SPVs). Structures like business development companies (BDCs) or opportunistic credit funds target even higher yields by moving down the capital structure or into less liquid positions.
Private Credit: Direct lending, specialty finance, and senior secured loans offer attractive yields unavailable in public bond markets, often with contractual protections and first-lien positions.
Blitz Defense: Aggressive Yield From Mezzanine And Distressed
The Play: The blitz is all-out aggression. You apply extra pressure, take calculated risks, and aim to disrupt the opponent’s game plan. It can lead to a quarterback sack for a loss, or leave you exposed.
Investment Role: At the aggressive end of defensive strategies sit mezzanine financing and distressed debt: high-yield opportunities that require deep credit analysis, tolerance for volatility, and acceptance of potential credit losses in exchange for double-digit income potential.
Assets
Mezzanine Debt: Subordinated, unsecured loans that sit between senior debt and equity. Higher risk, higher yield, often with equity kickers or warrants.
Distressed Credit: Investments in troubled companies or securities trading at steep discounts. These strategies bet on turnarounds, restructurings, or asset recoveries, but require expertise and strong stomachs.
Reading The Defense
The key is matching defensive strategy to client circumstances and market conditions. Advisors can:
• Play prevent with Treasuries and investment-grade bonds when preservation matters more and clients prioritize stability over yield.
• Run zone defense with structured credit and private credit when clients seek higher income and can tolerate illiquidity.
• Call the blitz with mezzanine and distressed credit when yield opportunities justify the risk and clients have the capacity for the potential downside.
Defense is about managing risk intelligently while generating the income clients need.
What’s Next
Defense protects position, but sometimes the game demands something different. In Part 3, we’ll explore special teams: uncorrelated strategies that can shift outcomes when traditional offense and defense require an additional dimension. In Part 4, we’ll put it all together: the advisor as coach, deploying the team across an ever-changing field. And if you missed it, Part 1 covered offensive growth strategies.
This article is adapted from The New Playbook for Alternative Investing, a practical framework for deploying alternatives across growth, income, and diversification. Discover and download the complete playbook from Welton Investment Partners.
Bill Marr is head of business growth at Welton Investment Partners. Chris Keenan is principal and director of marketing at Welton Investment Partners.