Uriel Loredo

The U.S. economy grew at a 1.4% annualized rate in the fourth quarter of 2025, below expectations, as the government shutdown weighed on spending and exports. For the full year, growth came in at 2.2%, down from 2.8% in 2024.

Meanwhile, core inflation rose to 3% year over year in December, remaining above the Federal Reserve’s target.

Private demand analysis

Although the headline GDP figure was weak, private demand showed resilience: final sales to private domestic purchasers increased 2.4% and private investment rose 3.8%. The main drag came from federal government spending.

With inflation still elevated, the Fed is likely to maintain a cautious stance before considering further rate cuts.

Implications

At the same time, core inflation reached 3%, still above the Federal Reserve’s target. While the headline growth figure was soft, private demand and investment showed resilience. The overall backdrop suggests the Fed will remain cautious in the months ahead.

Source: Bureau of Economic Analysis, Bloomberg

Understanding the Diversity of Alternatives: From Real Estate to Crypto

One of the most common questions I get from new team members or family principals is deceptively simple: “What exactly do you mean by alternatives?”

It’s a fair question. “Alts” is a broad label that covers everything from core real estate to crypto tokens.

But in my experience—both at a pension fund and now at a family office—how you classify and organize the alt universe shapes how you build, manage, and ultimately compound capital through it.

At AWM, we use a framework that breaks the space into ten categories: private equity, private debt, real estate, infrastructure, venture capital, hedge funds, secondaries, crypto, co-investments, and direct deals. It’s not perfect, but it’s practical—and it helps ensure we stay thoughtful about the role each bucket plays.

Core Categories: Income, Inflation Protection, and Growth

Private equity and venture capital are the long-term growth engines. PE focuses on improving mature businesses, often over 5–10 years, while VC backs early-stage, high-upside companies. Both are illiquid, high-risk, and long-duration—but also the best shot at accessing true alpha from private markets. They don’t generate regular income, and inflation protection is indirect, but they’re crucial for long-run compounding.

Private debt, on the other hand, is more about steady income. Direct lending, real estate credit, and asset-backed strategies can offer attractive yields, especially when structured with floating rates—which can help when inflation and rates are rising. But credit selection and downside protection become even more critical in downturns.

Real estate and infrastructure are classic “real assets.” They tend to shine during inflationary periods because rents, tariffs, and replacement costs rise with prices. Income streams are often contracted and predictable. Infrastructure—especially in regulated utilities, transport, and digital infra—offers particularly bond-like cash flows, but with the added benefit of tangible asset backing.

Strategy-Oriented Exposures and Portfolio Tools

Hedge funds are more about strategy than asset class. Some seek diversification through macro or market-neutral exposures. Others focus on yield via credit or arbitrage. In my pension fund days, we leaned on certain macro and quant managers for downside protection when rates and equities were both challenged. But dispersion is wide, and fees can erode value quickly without tight underwriting.

Secondaries are a portfolio construction tool. They offer accelerated deployment, discounted entry, and vintage diversification—especially helpful when building a new program. They’re not a direct inflation hedge, but they provide flexibility and cash flow smoothing, which helps in overall planning.

Co-investments and direct deals are where concentrated views meet deep alignment. In our framework, they sit on top of a primary-led core, and we only pursue them after years of building GP relationships and in-house diligence capabilities. They can enhance returns, especially when done with low fees and strong control, but they require more time, judgment, and risk management.

Emerging Exposures and the Role of Crypto

Cryptocurrencies are firmly in the alt category now. We treat crypto as a satellite position—small, high risk, and with a very different return driver. Bitcoin may be “digital gold” in theory, but in practice its behavior has varied across regimes. For us, crypto is less about inflation hedging and more about optionality on new infrastructure and asset paradigms. It’s not core, but it’s worth understanding.

Pulling It All Together

This classification helps us design portfolios where:

• Core real assets and private credit deliver income and inflation resilience
• Growth strategies like PE, VC, and directs aim for long-term capital appreciation
• Tools like secondaries and co-invests improve pacing and net returns
• Satellites like hedge funds and crypto add diversification and idiosyncratic upside

The Takeaway

In alternatives, how you organize matters almost as much as what you invest in. A clear, working taxonomy makes better decisions easier: where to lean in, where to stay cautious, and how to sequence capability development. That’s what turns a collection of deals into a real portfolio.

Source: AWM Internal Analysis

The nomination of Kevin Warsh as the next Chair of the Federal Reserve marks an inflection point for U.S. monetary policy. While he has recently signaled a more pro–lower rates stance, his track record points to a pragmatic, data-dependent approach.

Economic context

With a softening labor market, inflation still above target, and a politically sensitive backdrop, the Fed faces complex decisions. Current signals suggest rate cuts will continue gradually, guided more by economic fundamentals than political pressure.

Market implications

A change in Fed leadership does not automatically imply a loss of independence. Even with a potentially more flexible stance, investors should maintain a long-term investment mindset focused on value creation across market cycles.

Volatility is likely to remain a relevant factor if markets perceive deviations from the Fed’s traditional mandate. This is an environment that calls for careful analysis and a long-term perspective from investors.

Source: Capital Group, Brookings, Federal Reserve

Although Bitcoin was pioneering and revolutionary, its role as the foundation of a global financial system reveals key limitations that merit careful consideration.

Structural limitations

Bitcoin by its nature is limited to only 21 million coins. If we were able to mine them faster (quantum computing, I’m looking at you) or we run out (2150’s according to latest estimates), we will experience a crash akin to the silver boom of the 1850’s or the gold scarcity of the early 1900’s. This is giving away a powerful stabilization tool, i.e. monetary policy, to the quickness of mining. Relying on an external force to underpin global stability ends in catastrophe.

While the narrative of decentralized freedom of the individual against corrupt forces trying to control the world is a great story, life is more nuanced than that and underpinning the stability of the world’s economy to the mining and availability of bitcoin seems foolhardy to me. If bitcoin is cash and cash is bitcoin, any loss of bitcoin will mean a permanent loss of cash. So if someone were to mistakenly discard a hard drive, all of us collectively would have to live with less money. That is a problem, specially given our expansionary economies.

This is only highlighting a narrow issue. You have to also take into account the externalities of such a system, one of them being energy consumption in a world that is now hungrier than ever before for power, and many others which are outside the scope of this post.

The real future of cryptocurrencies

I believe in a not too distant future we will use the full benefits of crypto, decentralized ledgers, tokenization, smart contracts, and frictionless flows of capital. But I don’t think we will do it with bitcoin.

All throughout history humanity has tended to favour standardization and liquidity as they are more efficient over any other concerns when dealing with our methods of exchange for goods and services. The fungibility of gold nuggets (and its wide availability spread almost evenly worldwide) made it outcompete barter. These nuggets which in turn were displaced with coins, which were displaced by notes backed with that gold, which were displaced by debt backed by those notes backed by gold until we got to where we are today, where the exchange of services is backed by debt underpinned in trust.

To many people, the underpinning of the global economy in trust is a crazy idea born out of the lunacy derived from the Bretton Woods system, and it is true that our current economic model was partially developed at that conference. However, the idea is much older than that—about 1700 years old in fact.

Is it true that fiat money is backed by nothing? Correct, as its backing is not a tangible thing but an intangible one: trust. The world economy is fuelled by debt, which is a promise of deferred consumption in exchange for a future greater payment.

The real revolution

The big change I see derived from the crypto breakthrough is that trust can now be decentralized and assigned on an individual basis to anything and everyone around us. So in the future I could buy a car A using Z crypto which the dealer can convert to coin Y directly without having to rely on intermediaries or governments. This system will be backed both by the asset itself and the underlying expansionary coins we develop, which will be a mix of trust and asset backed.

Ironically, this would make the whole system pretty much a barter-based economy but with the fungibility, standardization, and liquidity of our current system.

In my opinion, crypto will be the foundation of our future method of exchange of goods and services, but it won’t be bitcoin.

Would love to hear your thoughts—why you think I’m right or why you think I’m wrong.

Source: Daniel Sánchez

The Federal Reserve kept its benchmark interest rate unchanged at 3.5%–3.75%, signaling a more optimistic view of the U.S. economy. The statement highlighted solid economic growth and early signs of stabilization in the unemployment rate, reducing the urgency for near-term rate cuts. 

While two members voted in favor of a reduction, the majority opted for caution amid persistent inflation pressures and a resilient labor market. The decision reinforces the Fed’s data-dependent approach to monetary policy. 

Market Implications 

Policymakers are balancing inflation control with labor market stability, avoiding premature easing. For markets, this points to a near-term period of stable rates, with the possibility of renewed cuts later in the year if inflation continues to cool. 

The tone of the statement suggests less urgency for near-term rate cuts, as policymakers continue to monitor inflation and employment trends. Key takeaway: caution, data dependence, and the potential for policy adjustments later in 2026 if conditions allow. 

Source: JP Morgan.