The Investment Policy Statement
As consultants to your portfolio, we review with you the goals, objectives, guidelines and risk tolerance for the assets being managed. We believe that development and review of the investment policy statement is the single most important step in achieving investment success; it is the blueprint for the entire investment program, establishing the direction for all investment-related activities.
Key components we look for in an investment policy statement:
- Statement of the role of fiduciaries in the investment process.
- Statement reflecting the responsibilities of the investment manager in the investment process.
- Clearly-stated investment objectives.
- Acceptable asset classes specified.
- A defined asset allocation policy.
- Delineated risk tolerance of the fund (i.e., liquidity, quality).
- A clearly defined method of gauging success of fund/managers.
- A statement of the time horizon for achieving goals.
A written investment policy statement is an important tool providing the client with realistic targets for future investment performance and a means for judging the quality of the results. For many of our clients, the trustees and key decision- makers may change over the years. The investment policy statement remains a constant reminder of decisions made and objectives desired and may serve as a valuable training tool for newly appointed trustees.