Write the rules before the market tests them.
Five questions produce a risk profile, a target allocation consistent with your answers, and a draft Investment Policy Statement you can print, save, or send.
What is this money for?
Purpose sets everything else. Choose the closest fit.
Horizon and withdrawalsdistributions
How long the capital must last, and how much leaves it each year.
The decline youthe fiduciaries would hold through
Not what should be tolerated. What would actually be held through without selling. The honest number is usually smaller than the first one.
If it fell that far, the most likely response would be to:
Constraints
Select all that apply.
Governance
Who decides, and how often the policy is reviewed.
Answer the questions above. The profile, allocation, and draft policy build as you go.
Investment Policy Statement
Prepared for the institution.
1. Purpose
- Purpose
- —
- Horizon
- —
- Spending policy
- —
- Return objective
- —
2. Risk
- Loss tolerance
- —
- Under stress
- —
- Profile
- —
3. Allocation
- Targets and ranges
- —
- Reserves
- —
- Rebalancing
- When any asset class moves outside its range, or at each scheduled review, whichever comes first. Rebalancing is executed by the advisor without a separate vote.
- Diversification
- No single security above 5% of the portfolio, other than diversified funds and U.S. Treasuries, unless the governing document or constraints below direct otherwise.
4. Constraints
- Noted
- None noted.
5. Governance
- Authority
- —
- Review
- —
- Reporting
- Performance reported against this policy's ranges and a blended benchmark at each review, net of fees.
- Standing rule
- No change to this policy is made during a market decline. Changes are made at scheduled reviews, in writing, after discussion.
Bring this to a conversation.
This draft is where the conversation with every household and institution we serve begins. If it raised a question, that is the point.
Schedule a call