# Fund Thesis Format > Canonical 7-part investment thesis structure. Use whenever you write a position note, proposal memo, decision-reasoning row, idea-scout idea, theme note, or chat brief naming a specific bet. Every new thesis MUST follow this skeleton. - Skill: `vdk888/fund-thesis-format` (Agent Skill) - Install (CLI): `npx skillmds@latest add vdk888/fund-thesis-format` - Raw SKILL.md: https://api.skillmd.com/api/skills/vdk888/fund-thesis-format/raw - Safety review: pending - Works with: Claude Code, Claude.ai, OpenAI Codex - Category: Coding & Dev Tools - License: MIT - Author: vdk888 (https://skillmd.com/u/vdk888) - Updated: 2026-09-17 - Page: https://skillmd.com/skills/vdk888/fund-thesis-format --- # fund-thesis-format — the 7-part structure This is a single source of truth for HOW to articulate an investment bet. Every new thesis MUST conform to this structure. The structure renders at three depths — a reference file, a proposal memo, a chat/phone render — using the same skeleton, just at different densities. The idea is **progressive disclosure**: the same content, three rendering surfaces, no thesis ever lives at only one depth. ## Why this exists Three problems this solves: 1. **Comparability.** Without a fixed structure, theses can't be ranked, conviction can't be tracked, kill triggers can't be audited. A standardized skeleton makes any thesis comparable to any other in the book. 2. **Falsifiability.** Section 4 (INVALIDATION) is mandatory. No thesis enters the book without a written kill condition. This is the discipline that prevents narrative drift. 3. **AI-agent + human dual readability.** The YAML frontmatter is machine-queryable; the prose body is human-readable; the chat render is phone-skim-friendly. One source, three surfaces. ## The 7 sections Every thesis MUST have these 7 sections, in this order, with these exact section names. Skip a section ONLY by writing one line stating WHY it doesn't apply (e.g., "no asymmetry framing for a hedge — see section 4"). A section silently omitted is a bug. ### 1. CLAIM A single declarative sentence stating the directional bet. No qualifiers ("potentially," "should," "may"). Just the bet. Pattern: `[Buy / Sell / Hedge with] [INSTRUMENT] because [SPECIFIC OBSERVABLE WILL HAPPEN] over [HORIZON].` Examples (good): - "Buy XBI 2% NAV because equal-weight biotech captures the AI-drug-discovery premium that cap-weight IBB dilutes, over 6-18 months." - "Hedge with IBCI 1.4% NAV because Eurozone inflation will surprise upward as ECB lags AI-capex spillover, over 12-24 months." Examples (bad — rewrite): - "XBI looks attractive given biotech tailwinds." (No bet, no observable, no horizon.) - "Add some infrastructure exposure for diversification." (Diversification is not a thesis.) ### 2. CAUSAL MECHANISM The chain of cause-and-effect that connects the observable in §1 to the price moving in your favor. Must be explicit, not assumed. Format: numbered chain, 3-7 links. Each link names an actor or mechanism, not a vibe. Example (XBI): 1. Big pharma (LLY/PFE/JNJ) facing patent cliffs 2026-2030 → must replenish pipeline 2. AI-drug-discovery shortens preclinical timeline 4-7 years → 2-3 years 3. Small/mid AI-native biotech (Recursion, Schrödinger) becomes M&A target 4. Equal-weight XBI captures takeover premium across 200+ candidates 5. Cap-weight IBB blunts effect (Amgen/Gilead = 25% of fund, no upside from M&A on themselves) 6. → XBI outperforms IBB; you own the right vehicle for the structural pattern. This forces "I believe X because Y because Z" articulation. No pattern-matching. ### 3. PORTFOLIO FIT Where this slots in the existing book. CITE NUMBERS — correlations to current holdings, cluster impact, sleeve consumption. Required sub-elements: - **Diversifies what?** Specific cluster or position the bet's correlation profile reduces overlap with. - **Duplicates what?** Specific cluster or position the bet partially overlaps. State the overlap so you don't pretend it's pure-new. - **Cluster impact:** Does this add to an existing cluster (concentration risk), open a new cluster, or sit between clusters? - **Sleeve consumption:** which sleeve (e.g. ETF backbone / single-stock / crypto / event) and how much of it does this consume post-add? A thesis without a portfolio-fit section is incomplete because it doesn't answer "why now, why this, why not something else you already own?" ### 4. INVALIDATION (kill conditions) — MANDATORY, NUMERIC The most important section. What concrete, observable, numeric event would PROVE this thesis wrong (in part or full)? Must be: - **Numeric** — "rate spikes >5.5%" not "rates rise" - **Time-bound** — "5+ consecutive sessions" not "for a while" - **Distinct** — full-exit triggers separated from trim triggers separated from "watch closely" triggers - **Asymmetric to entry** — exit triggers should be tighter than entry conviction, not looser Three classes of trigger: - **HARD STOP** — full exit, no judgment call. Usually -20% from entry, or a specific structural break. - **THESIS KILL** — full exit because the underlying mechanism (§2) is broken. E.g., "AI-capex guidance reduced at META/GOOGL/MSFT" for an infra bet. - **TRIM TRIGGER** — partial exit (typically 50%) on heightened risk that doesn't fully break the thesis. E.g., "10Y rates spike >5.5% sustained" for a rate-sensitive bet. A thesis without numeric invalidation is faith, not investment. ### 5. SIZING + TIME HORIZON Why THIS size, not bigger or smaller. Why this horizon to evaluate. Required sub-elements: - **Size class:** STARTER (1-2% NAV, low conviction or new asset class) / CONVICTION (3-5% NAV, well-understood thesis with track record) / CORE (6%+, only after multi-month positive evidence) / HEDGE (sized to the risk it offsets, not the alpha) - **Why this size:** Articulate the bound. "Why not 5% NAV? Because correlation to AI-credit cracks scenario is unproven; need 3 months of behavior before upsize." - **Horizon to evaluate:** When do you re-grade conviction? "12 weeks for a starter; if tracking diverges by >5ppts that's the upsize/exit decision." - **Marginal-risk-contribution citation** (recommended for any addition >2% NAV, required for single-stock if your mandate demands it). ### 6. ASYMMETRY Up-case vs down-case rough magnitudes. Without this, sizing is arbitrary. Format: `Up: +X% over if . Down: -Y% over if . Asymmetry ratio ≈ X:Y.` Example (XBI): "Up: +25-40% over 12-18m if AI-drug-discovery thesis manifests as accelerating M&A flow. Down: -15-20% if rates spike + biotech credit dries up. Asymmetry ≈ 1.5:1 to 2:1." If asymmetry is less than 1:1, the thesis must explicitly frame as a HEDGE (i.e., you accept negative-EV in exchange for protection in a tail scenario). Don't pretend a hedge is a positive-EV bet. ### 7. CONVICTION LEVERS The middle ground between "intact" and "killed." What concrete observables would move conviction up or down WITHOUT triggering full exit/upsize? Format: bulleted list, each line declarative + observable. Examples: - Up-conviction (would prompt upsize proposal): - A high-trust outlet specifically corroborates the thesis - 3-month price action confirms the mechanism - Cross-asset confirmation (e.g., bond market signals same regime) - Down-conviction (would prompt watch elevation, not full exit): - A single high-trust outlet refutes a key link in §2 - 3-month action diverges meaningfully from the comparable (e.g., XBI vs IBB) - Cross-asset divergence (e.g., AI capex narrative confirmed in equity but rejected in credit) ## Surface 1: REFERENCE FILE — the canonical implementation A per-position file (e.g. `positions/.md`) and per-theme file (e.g. `themes/.md`). YAML frontmatter — machine-queryable. Suggested fields: ```yaml --- ticker: INFR:xams weight_pct: 1.50 conviction: 3 view: hold opened_at: 2026-04-27T14:23:50Z thesis_slug: ai-data-center-power-broad claim: "Buy INFR 1.5% NAV because global infrastructure captures AI-data-center power demand more broadly than URA's narrow nuclear, over 12-24 months." size_class: starter horizon_weeks: 52 diversifies: [ai_capex_narrow_nuclear, single-country-utility] duplicates: [partial: ex_us_equity (25% emerging weight)] hedge_for: null # null if directional bet; ticker/scenario name if hedge asymmetry: up_pct: 30 down_pct: -15 horizon_months: 18 ratio: "2:1" invalidation_triggers: - type: hard_stop rule: "INFR -20% from entry €33.755 = €27.00" - type: thesis_kill rule: "Hyperscaler 2027 capex guidance reduced (META/GOOGL/MSFT)" - type: trim_50 rule: "10Y rates >5.5% sustained 5+ sessions" - type: structural_break rule: "INFR breaks 200d MA (~€30 estimated)" correlations_at_entry: SMH: 0.32 TLT: 0.30 SCHD: 0.41 MCHI: 0.30 SPY: 0.42 upcase_levers: ["high-trust corroboration of AI-power thesis", "3m positive INFR-IGF tracking", "transmission cap-rate compression"] downcase_levers: ["single high-trust refutation of capex thesis", "3m INFR underperforms IGF >5ppts", "credit cracks not transmitting to equity"] --- ``` Body sections — prose 1-7 with these exact headers (use `## 1. CLAIM`, `## 2. CAUSAL MECHANISM`, etc). Length: 400-800 words. Above 1000, split detail into a `theses/.md` reference file and link. ## Surface 2: PROPOSAL MEMO + decision-reasoning A dated proposal memo (e.g. `YYYY-MM-DD--proposal.md`) and the reasoning field of your decision record. The proposal memo opens with a 6-line summary block (machine-readable, human-skim-friendly): ``` CLAIM: Buy INFR 1.5% NAV because global infra captures AI-data-center power demand broadly, over 12-24m. SIZE: €776 = $912 = 1.50% NAV (starter); upsize gate at 12 weeks if INFR-IGF tracks within 2ppts. HORIZON: 12-18 months evaluation; multi-year hold if thesis confirms. CONVICTION: 3/5; would move to 4 if hyperscaler capex re-accelerates 2027. ASYMMETRY: +30% / -15% over 18m (~2:1 up-skew). KILL: Hyperscaler capex cuts (thesis-kill) · 10Y >5.5% 5+ sessions (trim-50) · 200d MA break (structural). ``` Then sections 1-7 in detail. Keep the memo ~600-1200 words; defer correlation tables and detailed math to the reference note. The decision-reasoning field gets the 6-line summary block + 2-3 sentences per section. Total ~500-800 chars — long enough for audit-trail completeness, short enough for quick review. ## Surface 3: CHAT — 5-line compact render The phone-friendly version. Use for: idea-scout TOP-N ideas, brief mentions of new bets, formal proposal pings, execution confirmations, weekly retrospective per-position summaries. Exact format (5 lines + 1 header line): ``` 🎯 INFR (1.50% NAV, conv 3/5, starter · 12-18m) CLAIM: Capture AI-data-center power demand broadly via global infra basket. WHY: 2030 +220% data-center power → utilities/transmission/grid pricing power. Not redundant w/ URA narrow-nuclear (corr SMH +0.32). KILL: Hyperscaler capex cuts · 10Y >5.5% 5+ sessions · 200d MA break. ASYM: +30% / -15% over 18m (~2:1 up-skew). ``` Rules: - **Line 1 header:** `🎯 (% NAV, conv /5, · )` - **Line 2 CLAIM:** the single sentence, copied verbatim from §1 of the reference file. - **Line 3 WHY:** condensed §2 mechanism, 1-2 sentences. Cite at least one concrete number (correlation, return, threshold). - **Line 4 KILL:** condensed §4 — top 3 invalidators separated by `·`. Use the type-prefix format ("trim-50", "thesis-kill") only for clarity. - **Line 5 ASYM:** §6 magnitudes + ratio. If hedge, write `HEDGE FOR: ` instead of asymmetry numbers. Total: 5 lines, ~250-350 chars per thesis. Three theses = ~1000-1100 chars — fits inside a typical 4096-char chat message cap with room for other sections. ## Failure modes to avoid - **Filling sections with vibes.** §2 CAUSAL MECHANISM is the test — if you can't write 3-7 specific links, you don't have a thesis, you have a hunch. - **Vague invalidators.** "If it doesn't work" is not a kill trigger. Numeric + time-bound or it doesn't count. - **Sizing without horizon.** "2% NAV starter" is meaningless without "evaluated at 12 weeks." Say when you'll re-grade. - **Pretending a hedge is a directional bet.** If §6 ASYMMETRY ratio is ≤1:1, the thesis is a hedge. Frame it as one explicitly, including a written "what's it hedging" line. - **Chat render skipping the WHY line.** The 5-line format is tight; the temptation is to drop the mechanism. Don't. Pure CLAIM + KILL + ASYM is just a trade alert; you're aiming for analysis someone can challenge.