Structural Alpha Methodology

1. Research precedes inclusion

A company cannot appear as an active constituent of a FIBCOS Structural Alpha Index unless the required research has been completed and the investment thesis has been documented and approved. There is no provisional inclusion, no watchlist that leaks into an Index, and no inclusion pending research.

2. What FIBCOS is looking for

A structural advantage is a characteristic of the business, not of the moment. FIBCOS assesses:

• Source of advantage — what specifically makes the position defensible, stated as a mechanism rather than an adjective.
• Durability — how long the mechanism can plausibly hold, and what would shorten it.
• Economics — whether the advantage converts into returns on capital exceeding the cost of capital over a cycle.
• Reinvestment capacity — whether the business can deploy capital at those returns, and for how long.
• Capital allocation — the executed record, not the stated policy.
• Governance and ownership — whether minority shareholders participate in the economics they are underwriting.
• Valuation framework — what the current price requires to be true, and whether the research supports it.

3. Evidence standard

Each structural driver must be supported by evidence that can be stated and checked. Assertions that cannot be evidenced are recorded as assumptions and treated as risks, not as drivers.

4. Falsification conditions

Every thesis states, at the time it is documented, what evidence would invalidate it. This is recorded before inclusion, not constructed afterwards.

5. Status

Active — the thesis is in force and the evidence standard is met.
Under Review — evidence has emerged that could change the structural conclusion. Review is resolved by completing research, never by price movement. Companies under review are not eligible for portfolio entry and are not added to.
Removed — the company no longer meets the criteria. The entry remains permanently visible with its inclusion date, removal date and rationale.

6. Index size

FIBCOS does not target a number of constituents per market, and market size does not determine coverage count. The research determines the Index. Uniform coverage across markets would be a presentational decision, not a research one — one Index may hold a handful of companies and another several dozen.

7. Index and portfolio

Membership of a country's Structural Alpha Index is a necessary condition for portfolio selection, not a sufficient one. The portfolio decision is a separate judgement about relative conviction and concentration, taken against the construction constraints published with each portfolio.

8. Continuous review

Theses are reviewed continuously and on defined triggers: earnings developments, material valuation change, new structural information, catalysts, emerging risks and shifts in competitive position. A review produces a thesis update, and every update is recorded against the constituent it affects.

9. What this methodology excludes

Price-momentum screening, thematic inclusion without company-level research, inclusion by analogy to a peer, and retrospective addition of a company that has already performed.