What does an Investment Policy Statement (IPS) summarize?

An Investment Policy Statement (IPS) serves as a comprehensive framework guiding the investment management process. It summarizes the client's unique circumstances, investment objectives, constraints, and the policies that will be employed in managing the investment portfolio.

The IPS is designed to articulate specific goals regarding investment return and risk tolerance while also outlining guidelines on asset allocation, investment strategies, liquidity needs, and ethical considerations. By covering all these elements, the IPS ensures that both the client and the investment manager have a clear understanding of the investment strategy and its alignment with the client's goals.

This comprehensive nature of the IPS makes it a valuable tool for maintaining an organized and consistent approach to investment management throughout the lifecycle of the portfolio. It is particularly important for long-term investors who need to remain focused on their objectives despite changing market conditions.