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Investment Policy Statement

Importance:
 
•  Imposes investment discipline & provides guidance for investment advisors.
 
Investment objectives:
 
•  Return objectives
•  Capacity to take risk
•  Willingness to take risk
 
Constraints:
 
•  Liquidity needs
•  Investment time horizon
•  Tax concerns
•  Legal & regulatory factors
•  Unique needs
•  Preferences

Willingness to take risks: based on investors' attitudes and beliefs

Ability to take risks: depends upon financial circumstances
 
•  Strategic Asset Allocation
•  Risk Budgeting
•  Tactical Asset Allocation
•  Security Analysis
•  Drift
•  Performance Review
Investment Constraints
 
•  Liquidity
•  Time Horizon
•  Tax Situation
•  Legal and regulatory
•  Unique Circumstances

 




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