Methodology
Our research seeks to understand not simply what an investment strategy has delivered, but how those outcomes were generated and whether the process behind them is repeatable.
TLI combines proprietary quantitative analysis through LIMANTIQ™ with substantive manager due diligence and independent investment judgement. Historical performance is evidence, not a substitute for forward-looking conviction.
The TLI research process
Our research follows a structured process, bringing together quantitative evidence, qualitative investigation and independent research judgement.
How Premier is determined
Five assessment stages inform the initial research decision, followed by ongoing monitoring of rated strategies.
Universe & governance
Eligibility, accountability, investment mandate, comparability and evidence quality.
LIMANTIQ™
Proprietary quantitative assessment of risk-aware value added, persistence and robustness, adapted where appropriate.
Qualitative due diligence
Investment philosophy, process, portfolio construction, risk, team structure and DDQ evidence.
Manager engagement
Substantive investment-team meeting to examine and challenge the research evidence.
Independent research judgement
The complete body of evidence is assessed to determine whether the strategy merits TLI’s highest forward-looking research conviction.
Ongoing monitoring & review
Premier-rated strategies remain subject to quantitative monitoring, manager and organisational review, and reassessment where material evidence changes.
Investment universe and governance
Before detailed assessment, TLI examines whether a strategy is suitable for inclusion in its research universe. We consider the mandate, history, benchmark appropriateness, organisational structure, manager accountability and the quality of available evidence.
Clear responsibility for investment decisions is particularly important. Strategies with substantially delegated or fragmented decision-making may be excluded from Premier consideration.
LIMANTIQ™ quantitative research
LIMANTIQ™ examines whether historical evidence is consistent with persistent, risk-aware manager value added. It does not attempt to predict which investment strategy will produce the highest future return.
LIMANTIQ combines core scoring dimensions with separate tests of persistence and robustness. Comparative assessment against relevant peers and benchmarks informs the research throughout.
- Core scoring
- Validation
Return efficiency, downside resilience and stability inform the core score. Persistence and leave-one-out robustness are validation checks. Relevant peers and benchmarks provide comparative context throughout the assessment.
Quantitative evidence does not mechanically determine ratings. LIMANTIQ’s proprietary algorithms, weightings, thresholds and peer-construction techniques are not publicly disclosed.
Qualitative due diligence
Quantitative research helps establish what happened. Qualitative due diligence examines why it happened and whether the underlying conditions remain intact.
TLI assesses investment philosophy, idea generation, portfolio construction, buy and sell discipline, risk management, team responsibilities, incentives, succession, liquidity and capacity. Portfolio positioning and attribution may also be examined to test consistency with the stated investment process.
Premier requires completion of the TLI due diligence questionnaire, or a sufficiently comprehensive fully mapped equivalent.
Substantive manager engagement
Direct engagement with the relevant investment team is mandatory before Premier can be awarded. A standard sales presentation is not sufficient.
We challenge the evidence, investigate areas of uncertainty and assess the consistency between the manager’s stated philosophy, actual portfolio decisions and historical outcomes.
Independent research judgement
The final assessment brings together quantitative evidence, qualitative findings, portfolio analysis and organisational considerations. TLI considers whether the overall evidence supports a coherent, repeatable and sufficiently well-supported investment proposition.
Research conclusions are documented and critically challenged. Formal governance and external oversight arrangements will continue to develop as TLI’s research programme evolves.
Premier is deliberately selective. Within sufficiently comparable mainstream investment universes, TLI would ordinarily expect only a small minority of strategies, typically up to approximately 5%, to warrant the designation. This is not a quota.
Investment trusts
TLI’s research universe includes both open-ended funds and investment trusts. Closed-ended structures introduce considerations that may materially affect investor outcomes and the interpretation of historical evidence.
Our assessment may consider NAV performance, share-price behaviour, discounts and premiums, gearing, liquidity, capital allocation, share issuance and buybacks, board independence, governance and fee structures.
For mainstream trust sectors with sufficiently comparable strategies and reliable historical data, LIMANTIQ may form an important component of the assessment. For specialist, heterogeneous, illiquid or structurally unusual trusts, greater emphasis may be placed on fundamental and qualitative research where conventional statistical comparisons would be misleading.
Stage 06
Ongoing research and monitoring
Premier reflects conviction in a strategy as it currently exists. It is not a permanent award.
Rated strategies remain subject to monitoring of key investment personnel, philosophy and process, portfolio behaviour, organisational support and quantitative evidence. Material changes, including manager departures or significant capacity constraints, may trigger further research.
Quantitative evidence is refreshed periodically, while material qualitative developments can prompt reassessment at any time. A rating may be maintained, placed under review or withdrawn as the evidence changes.
Independence by design
There is no expectation of payment for being researched or for receiving a TLI Premier™ rating. Research decisions are made independently of commercial licensing considerations.
Following an independent award, a fund house may choose to license the Premier mark for approved communications. Purchasing, declining or terminating a licence does not determine whether a rating is awarded, maintained or withdrawn.
TLI research and ratings represent independent research opinion based on information available at the time of assessment. Ratings are not guarantees of future performance and do not constitute personalised investment advice to retail investors. The Literate Investor Limited is not authorised or regulated by the Financial Conduct Authority.
