What does the return objective in an IPS primarily aim to achieve?

The return objective in an Investment Policy Statement (IPS) is fundamentally designed to support the investor's long-term financial objectives. It outlines the specific return expectations that align with the investor's overall goals, accounting for factors such as risk tolerance, investment horizon, and liquidity needs. By establishing a return objective, the IPS serves as a guideline for investment decisions and portfolio construction, ensuring that the strategies employed are coherent with the longer-term aspirations of the investor, such as funding retirement, education, or wealth accumulation.

This focus on long-term financial goals often helps in maintaining discipline during market fluctuations, allowing investors to stay aligned with their strategic investment plan rather than reacting impulsively to short-term market movements. This approach encourages a commitment to the investment strategy that is more likely to yield beneficial outcomes over time.

While other options such as maximizing short-term gains, minimizing transaction costs, and ensuring minimum liquidity are important investment considerations, they are not the primary aims of the return objective within an IPS. The main purpose is to provide a framework that helps investors achieve their overarching financial goals in a structured and measured way.