What to include in an Investment Policy Statement?

Financial Planning Dentist
  1. Investment objectives: The first step in drafting an IPS is to define the investment objectives clearly. This includes the risk and return objectives, which will guide the investment decisions. The IPS should also state the investment horizon, which determines the timeframe for achieving the investment goals.
  2. Asset allocation: The IPS should outline the asset allocation strategy, which defines the proportion of assets allocated to each asset class. The asset allocation should be consistent with the investment objectives and the investment horizon.
  3. Risk management: The IPS should also include a risk management strategy that outlines how risks will be managed, monitored, and evaluated. The risk management strategy should be consistent with the investment objectives and the risk tolerance of the trust or family office.
  4. Roles and responsibilities: The IPS should establish the roles and responsibilities of the investors, fiduciaries, and investment managers. It should define who is responsible for making investment decisions, monitoring the portfolio, and evaluating performance.
  5. Performance evaluation: The IPS should include a performance evaluation process that assesses the performance of the investment portfolio relative to the investment objectives. The evaluation should be conducted regularly and used to make adjustments to the investment strategy.

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