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Investment Policies

Investment Policy Statement

An investment policy statement (IPS) is a written document that outlines an investor's investment goals, objectives, and guidelines. It is a formal document that is developed by an investor or an investment manager to establish a clear understanding of the investment approach and to set out guidelines for investment decisions.

An IPS typically includes the following components:

The Five Key Points

The Five Key Points

An IPS serves as a roadmap for investment decisions, providing clear guidelines for investment managers or investors to follow. It can also serve as a reference point for measuring the success of the investment strategy over time.

  • 1. Investment Objectives

    Outlines the investor's goals for the investment portfolio. It may include objectives such as long-term growth, income, capital preservation, or a combination of these.

  • 2. Investment Time Horizon

    Specifies the investor's intended investment time horizon, which may range from short-term to long-term.

  • 3. Asset Allocation Strategy: 

    Outlines the asset allocation strategy that will be used to achieve the investment objectives. This includes the allocation of investments across different asset classes such as stocks, bonds, and cash.

  • 4. Investment Guidelines

    Sets out the guidelines for investment decisions, including risk tolerance, diversification, and restrictions on certain types of investments.

  • 5. Performance Measurement

    Specifies the benchmarks that will be used to measure the performance of the portfolio.

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