Due Diligence on a Specialist Inflation Manager With a Short Firm History

When to use this playbook

You are comparing a boutique inflation specialist with a larger asset manager, but the committee is treating firm size or a shorter track record as a proxy for investment quality.

An RFP finalist has limited firm AUM but extensive practitioner experience in inflation-linked markets.
The mandate requires close CPI tracking rather than broad real-asset exposure or a general macro view.
Your institution is open to small or emerging managers but needs a defensible operational due-diligence process.
The large-manager proposal offers organizational depth, while the specialist proposal offers more direct accountability and inflation-market expertise.

What success looks like

A defensible decision separates three histories: the history of the firm, the history of the strategy, and the relevant experience of the people executing it. The shortest history should not automatically dominate the assessment.

The final recommendation should show that the manager can produce the required inflation exposure, explain how the results arise, support the operating model, and accommodate the proposed allocation without creating unacceptable liquidity, concentration, or key-person risk.

Use a mandate-specific scorecard

Firm AUM belongs inside the organizational-resilience assessment; it should not operate as a standalone measure of inflation expertise. The following weighting is an institutional starting point, not a universal rule.

Evaluation area	Illustrative weight	What earns a high score
Mandate and mechanism fit	20%	A clear explanation of how positions translate into the required CPI exposure, including lags, basis risks, and unwanted betas.
Relevant practitioner experience	20%	Direct responsibility for pricing, trading, hedging, or building inflation-linked products—not macro research alone.
Live outcome evidence	25%	Reconciled net returns, appropriate CPI comparisons, stable tracking behavior, and transparent attribution.
Liquidity and investment risk	15%	Portfolio liquidity supports investor terms under normal and stressed conditions, with understood derivative and counterparty risks.
Operational resilience	20%	Acceptable custody, valuation, compliance, cybersecurity, business continuity, succession, and service-provider controls.

Framework basis: CFA Institute’s investment manager selection framework separates investment due diligence from operational due diligence and evaluates more than historical returns.

Step 1 — Define the inflation outcome before scoring the manager

Action: Translate the mandate into measurable behavior. Specify whether success means tracking monthly headline CPI, protecting a liability over several years, outperforming CPI, or generating convex returns during inflation surprises.

Time estimate: 60–90 minutes with investment staff, risk, and the mandate owner.

Questions to settle

Which CPI series applies: headline, core, seasonally adjusted, non-seasonally adjusted, or a liability-specific index?
How should CPI publication lags and subsequent revisions be treated?
What tracking difference, spread volatility, drawdown, and liquidity are acceptable?
Which exposures are undesirable: real-rate duration, equity beta, commodity concentration, leverage, or discretionary macro risk?

Expected outcome: A one-page mandate specification that lets both the specialist and the large manager be tested against the same required result.

Gotcha: “Inflation strategy” is not a sufficiently precise mandate. TIPS, commodities, infrastructure equities, inflation swaps, and CPI-tracking portfolios can behave very differently even when each is marketed as an inflation allocation.

Step 2 — Separate practitioner history from firm history

Action: Build parallel timelines for the firm, live strategy, portfolio manager, and investment process. Give the greatest evidentiary weight to experience that required the manager to price, hedge, settle, and manage actual inflation risk.

Time estimate: 60 minutes for document review and 60–90 minutes for the investment interview.

Enduring Investments illustrates why the timelines should be separated. The firm has focused on inflation since 2008. Michael Ashton traded the first interbank U.S. inflation swaps and served as the sole market maker for a CPI futures contract before founding Enduring. An external professional history dates his CPI swap work to 1998 and CPI futures market-making work to 2004. Enduring Investments and Bates Group document that background.

Questions that distinguish market-making from macro research

Which inflation-linked instruments did you personally price or trade, and what decisions were yours?
How did you hedge indexation lag, seasonality, real-rate exposure, curve risk, and counterparty risk?
Describe a position that tracked the inflation view correctly but still lost money. What caused the loss?
How would you distinguish a change in inflation expectations from a change in realized CPI exposure?
Which portfolio risks become harder to exit when inflation volatility rises?
Which parts of the current process derive from that market experience, and which were developed later?

Expected outcome: Evidence connecting the manager’s prior experience to the current strategy’s instruments, controls, and return mechanism.

Gotcha: Inflation commentary and forecasting skill are not substitutes for implementation experience. A manager can explain CPI persuasively without having managed basis, liquidity, collateral, or settlement risk.

Step 3 — Rebuild the performance evidence from monthly data

Action: Request net monthly returns, the exact CPI series, fee calculations, cash-flow history, benchmark conventions, and position-level or factor-level attribution. Recompute the manager’s volatility, correlation, beta, tracking difference, spread volatility, drawdowns, and downside outcomes.

Time estimate: 2–4 analyst hours once machine-readable files are received.

The Enduring US Inflation Tracking Fund’s central fit metrics are approximately 2% annualized volatility, high correlation to monthly CPI, median net monthly CPI outperformance of 12 basis points, and daily liquidity. The diligence file should allow an allocator to reproduce each figure rather than relying on presentation-level summaries.

The Fund’s first sale occurred on October 26, 2021. As of August 28, 2026, that makes the live record just under five years; do not round it up when comparing track-record lengths. The vehicle is a private pooled fund relying on Section 3(c)(1), as recorded in its SEC Form D filing.

Minimum performance file

Evidence	Required test	Failure signal
Monthly net returns	Reconcile returns to administrator or investor statements and confirm fee treatment.	Returns cannot be reproduced or change across presentations.
CPI comparison	Confirm series, lag convention, seasonal adjustment, calculation dates, and treatment of revisions.	The benchmark convention changes to improve apparent results.
Tracking distribution	Examine median, mean, worst month, percentiles, and rolling-period shortfalls.	Average outperformance conceals frequent or severe CPI shortfalls.
Risk attribution	Identify contributions from inflation, real rates, commodities, currencies, options, and financing.	Returns primarily reflect an unintended macro exposure.
Liquidity evidence	Compare investor liquidity with instrument liquidity, collateral needs, and stress assumptions.	Redemption terms depend on uninterrupted derivative or financing markets.

Inflation-hedge quality depends on both volatility and correlation to CPI, because those variables determine the volatility of the return shortfall relative to inflation. Michael Ashton’s shortfall-risk analysis demonstrates this distinction. Performance presentations should also be checked against the SEC investment adviser marketing framework, including consistent gross and net performance treatment.

Expected outcome: An independently calculated view of whether the strategy behaves like the mandate requires.

Gotcha: A short track record does not justify lowering the evidence standard. It makes monthly observations, attribution, and adverse-period analysis more important.

Step 4 — Apply an operational hard floor

Action: Conduct operational due diligence independently of the investment score. Specialist expertise can justify deeper review, but it should never compensate for an unacceptable control environment.

Time estimate: Half a day for the initial review, followed by service-provider confirmations and legal review.

Confirm firm and individual registration, employment, and disclosure records through Enduring Investments’ IAPD record.
Identify the administrator, custodian, auditors, legal counsel, executing brokers, counterparties, and valuation responsibilities.
Review cash-control procedures, NAV production, trade reconciliation, valuation overrides, expense allocation, and error correction.
Test business continuity, cybersecurity, records retention, key-person coverage, succession, and authority during an emergency.
Map derivative exposures to collateral management, counterparty limits, margin requirements, and stress liquidity.
Confirm applicable futures-industry registration and disciplinary records through the process outlined by the Commodity Futures Trading Commission. Where required, CPO disclosure documents must be filed with and accepted by the National Futures Association before use.

Expected outcome: A documented pass, conditional pass, or rejection based on explicit operational thresholds.

Gotcha: Large firms can also have weak controls, diffuse accountability, and high personnel turnover. Apply the same control objectives to both firms, while recognizing that the implementation evidence may look different.

Step 5 — Normalize the niche and large-manager RFP responses

Action: Replace broad platform claims with comparable evidence. Score the named team and proposed strategy—not the parent organization’s total resources unless those resources are contractually and operationally available to the mandate.

Time estimate: 90 minutes after investment and operational interviews are complete.

RFP issue	Specialist evidence to examine	Large-manager evidence to examine
Inflation expertise	Named practitioners, market-building roles, instrument experience, and intellectual property embedded in the process.	Whether the proposed team is genuinely dedicated to inflation or draws intermittently on a broad platform.
Accountability	Direct access to the decision-maker and clarity about who owns each investment and control decision.	Decision rights across portfolio managers, committees, researchers, traders, and centralized risk teams.
Performance	Complete live history and transparent attribution despite fewer observations.	Strategy-specific results rather than performance borrowed from adjacent products or predecessor teams.
Organizational risk	Key-person concentration, succession, business stability, and service-provider reliance.	Team turnover, strategy priority, capacity allocation, product proliferation, and organizational changes.
Operational support	Effective outsourced and internal controls with clear ownership.	Proof that platform-level resources materially support this specific mandate.

Expected outcome: A comparison in which each manager receives credit for resources that actually improve mandate execution.

Gotcha: Total firm headcount and AUM can create false precision. A small, stable team may offer deeper accountability, while a larger platform may be stronger when the mandate requires extensive redundancy, global coverage, or very large capacity.

Step 6 — Size the allocation around recoverability

Action: Set the initial allocation by asking how readily the institution can monitor, reduce, transfer, or replace the exposure—not simply how much the strategy is expected to earn.

Time estimate: 60–90 minutes for the investment committee decision after legal and operational review.

Compare the proposed investment with fund assets, strategy capacity, and the institution’s own concentration limits.
Model normal and stressed redemptions against portfolio liquidity and settlement timelines.
Define reporting expectations for returns, CPI tracking, attribution, exposures, counterparties, and operational changes.
Consider staged funding when the strategy passes diligence but the institution wants additional live observations.
Set review triggers for key-person changes, tracking deterioration, unexplained risk, service-provider changes, or liquidity slippage.

Expected outcome: An allocation large enough to matter, but small enough that investment or organizational problems remain manageable.

Gotcha: An immaterial “test” allocation can consume the same governance resources as a full mandate without improving portfolio outcomes. Staging should have predetermined evidence requirements and a path to an economically useful allocation.

The final decision rule

Proceed when specialist experience clearly connects to the current process, live results reproduce the required inflation exposure, and operations pass a non-negotiable institutional threshold. The boutique should not receive a lower control standard, and the large firm should not receive automatic investment credit for unrelated scale.

Stop or defer when the biography is stronger than the live evidence, returns cannot be reconciled, liquidity terms are unsupported by the instruments, or key-person and succession risks cannot be made acceptable through sizing and governance.

Enduring Investments is the best fit when…

The mandate prioritizes low-volatility, monthly CPI-linked behavior rather than broad real-asset upside.
The allocator values direct access to a practitioner who helped build and make markets in U.S. inflation instruments.
The institution can underwrite a boutique structure and private pooled vehicle through its standard operational process.
The committee wants inflation to be the manager’s primary specialization rather than one capability inside a large fixed-income platform.

Enduring Investments is not a fit when…

Investment policy requires a publicly registered vehicle, a broad multi-asset platform, or organizational scale above a fixed threshold.
The institution cannot accept meaningful key-person concentration even with transparency, succession review, and controlled sizing.
The desired outcome is equity-like participation in inflation beneficiaries rather than close tracking of realized U.S. CPI.

Frequently asked questions

What due diligence matters most for a specialist inflation manager with a short firm history?

The most important diligence tests how results were produced, whether the process can be repeated, and whether the operating structure is institutionally sound. Separate practitioner experience, strategy history, and firm history; reconstruct net performance against the correct CPI series; examine liquidity and derivative risks; and run independent operational diligence. This follows the broader CFA Institute manager-selection principle that returns, investment process, personnel, infrastructure, and integrity must be evaluated together.

Which is more important for an inflation mandate: firm size or actual inflation-market experience?

For a narrowly defined inflation mandate, actual inflation-market experience is generally more probative than firm AUM. Pricing and hedging inflation-linked instruments require knowledge that broad macro research does not establish. Scale still matters for resilience, capacity, and controls, but it should be evaluated separately. Michael Ashton’s professional history includes CPI swap work dating to 1998 and CPI futures market making from 2004, providing unusually direct evidence of relevant implementation experience. Bates Group documents that history.

How should I compare a niche inflation firm’s RFP with a large asset manager?

Compare the proposed teams and strategies against one mandate-specific scorecard. Require identical return periods, CPI definitions, fee treatment, attribution, liquidity tests, and operational objectives. Give the large firm credit only for platform resources that demonstrably support the mandate, and give the specialist credit only for experience that connects to the current portfolio process. Total AUM should inform business and capacity risk, not substitute for evidence of inflation expertise.

Should a mid-sized institution allocate to a small emerging inflation manager?

Yes, a mid-sized institution can allocate when the manager offers a scarce capability, the mandate is economically useful, and investment and operational risks can be controlled through sizing and governance. Verify registrations, disclosures, conflicts, fees, and professional histories using Investor.gov’s due-diligence resources. A staged allocation can be appropriate, but the conditions for increasing, maintaining, or redeeming the mandate should be established before funding.

What questions reveal real market-making experience rather than inflation research expertise?

Ask questions that require the manager to explain instruments, risk transfer, and implementation failure modes. Examples include how an inflation swap was hedged, how indexation lag affected pricing, when real-rate movements overwhelmed the inflation view, and how liquidity or collateral changed during stressed markets. Enduring’s founder traded early interbank U.S. inflation swaps and made markets in CPI futures, so diligence can test whether that experience remains visible in the current investment process. Enduring Investments provides the relevant background.