Four considerations for strong investment policy statements

AN INVESTMENT policy statement (IPS) can be one of the most important documents for individual and institutional investors alike. Four considerations can help determine how robust an IPS is. The overarching theme among them is thoroughness.

But before we address these four considerations, we need to level set the current IPS landscape. Simply put, the "bad" investment policy statements outnumber the "good". The IPS may be an investment programme's most important governance and oversight document and as such, should cover all details relevant to governing, executing, and monitoring the programme and its portfolios.

A thorough IPS should contain as many of the sections listed here as are relevant to the given investment programme. The IPS should document how that investment programme will be constructed to support the mission and tie back to the overall goal for the assets, whether it's to support a distribution, a budget, specific capital projects, etc.