Weekly Comment

Colombia’s presidential election is headed to a runoff after a closer-than-expected first-round result. The outcome opens a new chapter for financial markets, which are now weighing the economic implications of each candidate more closely.

A Highly Competitive First Round Sets the Stage for June 21

Colombia’s presidential election is headed to a runoff after a closer-than-expected first-round result. Abelardo de la Espriella secured 43.7% of the vote, compared to Iván Cepeda’s 40.9%, highlighting a deeply polarized electorate and two distinct economic and political visions. Markets responded positively to the initial outcome, while investors begin to assess more closely how each candidate’s proposals could affect economic growth, private investment, fiscal stability, and long-term development.

The June 21 runoff will be closely watched by financial markets. De la Espriella has advocated for policies centered on strengthening private investment, fiscal discipline, public security, and closer economic ties with the United States. Meanwhile, Cepeda represents greater continuity with the current administration’s agenda, emphasizing social programs and a more active role for the state in the economy.

Regardless of the outcome, investors will focus on the next government’s ability to preserve fiscal stability and foster confidence for long-term investment. The June 21 election could become one of the most important political events in Latin America during 2026.

Source: Reuters

The S&P 500 posts its strongest earnings growth since 2021.

Corporate results continue to surprise positively

The Q1 2026 earnings season has delivered strong results for the S&P 500. With 94% of companies having reported, 84% exceeded earnings expectations and 81% beat revenue estimates. Annual earnings growth stands at 28.4%, the highest since 2021, while revenues are up 11.6%.

Consensus expectations point to earnings growth of approximately 22% for full-year 2026, supporting market optimism despite elevated valuations. The S&P 500 forward P/E stands at 21.1x, above historical averages.

Corporate performance continues to be one of the main supports for the U.S. market. Positive earnings revisions reflect companies’ operational resilience and adaptability. However, elevated valuations suggest that part of the optimism is already priced in, which could increase market sensitivity if expectations are not met.

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Source: FactSet

Real estate remains a key building block of diversified portfolios. Understanding its fundamentals is essential to evaluating its role as an income generator and inflation hedge.

A core asset class: fundamentals and key trends

Real estate is an asset class based on investing in physical properties — such as residential, office, and logistics infrastructure — that generate income through rents and capital appreciation. Its appeal lies in its ability to produce relatively stable cash flows and act as a partial hedge against inflation, making it a relevant component of diversified portfolios.

In 2025, fundraising has rebounded, driven primarily by debt strategies and opportunistic funds. North America leads global activity, while Europe and Asia show more limited momentum. Despite this recovery, the current environment presents challenges: lower transaction activity, valuation pressures, and increased selectivity in capital allocation.

For investors, the current moment calls for discipline and clarity around risk-return objectives. Demographic trends and structural housing shortages continue to create opportunities, while the growing relevance of debt strategies and residential assets reflects a repositioning in market preferences.

Real estate’s appeal lies in its ability to generate relatively stable cash flows and act as a partial hedge against inflation. However, the current environment presents challenges: lower transaction activity, valuation pressures, and increased selectivity in capital allocation. The growing relevance of debt strategies and residential assets reflects a shift in risk-return preferences.

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Source: JP Morgan

April’s inflation data in the U.S. presents a mixed picture: rising prices alongside a consumer that, for now, is holding firm.

U.S. inflation reaches highs while retail holds steady

U.S. inflation accelerated to 3.8% year-over-year in April, its highest level since May 2023. While the energy sector drove much of the increase, core inflation also rose to 2.8%, remaining above the Federal Reserve’s target.

Despite this environment and a slight decline in real wages, consumer spending remains notably resilient. The retail sector added 22,000 jobs during the month, reflecting strong business confidence amid sustained demand.

Persistent inflation complicates the Federal Reserve’s outlook. However, labor market resilience and continued hiring in retail suggest that consumption is, for now, cushioning the impact of higher fuel costs and geopolitical tensions.

Core prices posted their fastest monthly pace since January 2025, complicating the Fed’s path to rate cuts. Still, retail hiring and consumer resilience offer a signal of strength in the real economy.

Source: Bureau of Labor Statistics

Infrastructure is one of the fastest-growing asset classes within private markets. Understanding what drives it and how it generates value is the first step in evaluating its role in a portfolio.

Fundamentals of an asset class built for the long term

Infrastructure encompasses essential assets such as energy, transportation, and digital networks, whose central characteristic is the generation of stable and predictable income over time. Unlike other asset classes, its value does not depend on short-term economic cycles, but on the structural demand for basic services.

In recent years, trends such as the energy transition and digitalization have expanded the universe of available opportunities, attracting institutional capital toward projects with long investment horizons.

However, the current environment presents important nuances: while fundraising has rebounded, it remains concentrated primarily in larger funds. Deal activity, meanwhile, faces pressure from lower transaction volumes.

Infrastructure stands out for its ability to generate predictable and resilient cash flows, even in volatile environments. However, the current landscape shows an imbalance between available capital and investment opportunities. Increased appetite for higher-risk strategies reflects an active search for yield, reinforcing the importance of manager selection and valuation discipline.

Source: JP Morgan

The Federal Reserve kept its benchmark rate unchanged at 3.5%–3.75%, in line with expectations. However, the vote revealed an unusual level of division, with four officials dissenting, the highest since 1992. While some policymakers pushed back against signaling future cuts, another voted in favor of lowering rates. Rising geopolitical tensions, particularly in the Middle East, are increasing uncertainty and complicating the balance between persistent inflation and signs of economic slowdown.

Mixed signals from within

The Fed’s message is more nuanced than the decision itself. Stable rates contrast with a growing internal debate over the policy path ahead. Higher energy prices continue to pressure inflation, while the labor market shows signs of weakening. This backdrop points to increased volatility, with limited visibility on rate cuts and macro risks balanced in both directions.

Source: CNBC

Energy pressures drive inflation higher

Inflation in the United States rose in March, driven by higher energy prices amid geopolitical tensions. However, core inflation showed greater stability, indicating that underlying inflationary pressures remain contained. This dynamic highlights an environment where short-term movements may distort the broader picture, while the underlying trend remains the primary focus for monetary policy.

The recent inflation increase is largely driven by external and transitory factors. The moderation in core inflation suggests that structural pressures have not intensified. In this context, the Fed may remain patient, focusing on the broader inflation trend beyond temporary shocks, with particular attention to services and labor market conditions.

Source: U.S. Bureau of Labor Statistics

A simple guide to understand this asset class

Private equity involves investing in companies that are not publicly listed, with the goal of improving their value and exiting the investment over time. These investments typically have longer horizons and depend on factors such as operational growth, market conditions, and exit opportunities. Unlike public markets, capital is deployed gradually, and returns are realized over time, requiring patience and discipline from investors.

Performance in private equity can vary significantly across managers, making manager selection critical. Factors such as exit execution, access to opportunities, and investment discipline directly impact outcomes. In addition, market cycles, interest rates, and liquidity conditions influence the pace of investment and exits within this asset class.

Source: Jp Morgan

Discipline and perspective in times of uncertainty

Periods of volatility are a natural part of markets. While they create uncertainty, they also highlight the importance of maintaining discipline. In these environments, it is essential to recognize our reactions, put events into perspective, and stay focused on long-term objectives.

History shows that despite recurring crises, markets have remained resilient. Avoiding impulsive decisions and maintaining consistency in strategy often matters more than reacting to short-term movements.

Volatility can create opportunities, but it requires focus. Beyond short-term noise, it is a good time to revisit objectives, evaluate gradual adjustments, and consider strategies such as rebalancing or phased investing. In many cases, the best decision is to stay the course. Consistency, rather than market timing, has historically been the primary driver of long-term portfolio value.

Source: Capital Group, Standard & Poor’s

Due diligence isn’t just about validating performance metrics or checking boxes on operational risk. In alternatives—where relationships are long-term, structures are complex, and outcomes are path-dependent—successful DD must be holistic. It needs to reflect the full scope of what you’re signing up for: financial, operational, reputational, philosophical, and relational.

In our experience—both at a pension fund and now at a family office—some of the worst outcomes stemmed not from flawed models, but from poor alignment and blind spots outside the “investment” lens.

Investment quality is just the start

Investment DD will always be the anchor. Track record, strategy clarity, team pedigree, edge, and portfolio construction matter. But in alts, that’s the easy part. Most managers we meet know how to tell a good story, show a clean IRR, and present a polished deck. The real work starts once you go beyond that.

Operational due diligence reveals whether they can actually run a stable, compliant, well-governed business. You’re looking at valuation policies, fund admin, cybersecurity, service providers, and more. One lesson we learned the hard way: a fund with top-quartile performance can still be operationally brittle. And when things break, it’s usually operational—not strategic—failures that do the damage.

Risk and reputational DD: don’t skip it

The reality is that family offices can’t afford to ignore reputational risk. You’re not just a number on a cap table; your capital comes with a name, a story, and often, a legacy. That means DD must now include headline-risk scanning, regulatory flags, and tax behavior scrutiny.

At Activest we’ve walked away from managers with stellar returns but questionable tax setups. Why? Because aggressive tax structuring often correlates with overly “creative” accounting. If they’re pushing boundaries on one front, you have to ask where else they’re cutting corners.

Similarly, we’ve tightened our screens around ESG controversies and governance patterns. A GP embroiled in labor disputes or past sanctions might not affect this quarter’s NAV—but it can absolutely affect your long-term brand, values, and peace of mind.

Alignment and philosophical fit are everything

Some of the most important DD questions aren’t in the data room. They’re in the conversations.

• Do they think in terms of compounding, or of raising the next fund?
• Do they cap fund size to preserve performance, or do they chase AUM?

How do they handle mistakes—and communicate when things go wrong?

We’ve declined funds not because they lacked performance, but because they lacked cultural fit. If the manager’s approach to risk, alignment, and communication doesn’t match ours, the relationship will fray over time. It’s not just about the numbers; it’s about how those numbers are achieved—and how repeatable that process is over 15–20 years.

One of the things we’re most grateful for is that alignment internally. We make plenty of mistakes, but our goals and vision remain unified—and genuinely, that’s what makes the whole platform work. Everyone—from investment to ops to IC—understands that compounding capital and protecting the family’s reputation are two sides of the same coin.

DD as a long-term partnership filter

Ultimately, we treat due diligence as the start of a potential long-term partnership. Whether it’s a GP, a co-invest platform, or a direct operating company, our lens is simple: Would we be comfortable doing business with this team across a cycle? Would we want to deepen the relationship if things go well—or would we feel exposed?

That’s why we pace our involvement: primaries first, then secondaries, then co-invests, and only much later, direct deals. By the time we consider a direct, we’ve already seen the GP under pressure, across exits, and in less-than-perfect environments. That’s when trust becomes tangible.

Holistic due diligence is not just a best practice—it’s a requirement if you want to build a resilient alternatives portfolio. Investment, operational, risk, tax, reputational, and philosophical alignment all matter. In isolation, each might look “fine.” But when woven together under a unified framework, they create a powerful filter that protects capital and compounds confidence over decades.

Source: AWM Internal Analysis