50+ Sample Investment Policy Statements

What is an Investment Policy Statement?

An investment policy statement is a formal business strategy document that guides a client or an investor when it comes to the planning and implementation of an investment program. It describes the major investment goals and objectives of a client or an investor and explains the strategies that the manager must be able to carry out to fulfill these key objectives. Some main components that should be included in an investment policy statement are asset allocation, liquidity requirements, and risk tolerance. 

This type of policy statement is used to provide proper guidance as it acts as a strategy map on portfolio construction and ongoing management, to care for the client’s order and standard, to help in avoiding deviations due to uncertain market conditions, and to keep clients fixated on their primary objectives. It should not be written to solely satisfy compliance or regulatory requirements and made without testing the effectiveness of the portfolio design and portfolio management plan to real results. 

Examples of Investment Policy Statements

There are many investment policy statements and investment documents that many businesses and professionals use for their investment projects like an investment banking agreement or an equity investment agreement form. Here are some common examples of investment policy statements in different fields and industries.

College Investment Policy Statement: This is used by college institutions to define the purpose, scope, investment objectives, and management and investment guidelines. If you need to prepare this document, indicate in the purpose that the investment policy statement for your college institution sets the principles and guidelines for the management of your educational firm. Highlight in your scope that the policy that will be implemented applies to endowment assets for which the Investment Committee has eligible authority. Create this policy statement if your college institution needs funds for the current and future support of its operations and gain financial stability. Some important factors to be added to the management and investment guidelines when making endowment investment management decisions are the general economic conditions, the possible effect of inflation or deflation, and the expected tax consequences of any investment decisions or strategies. Health Care Investment Policy Statement:It explains the policies that will govern the investment program and the management of the investment assets of a healthcare institution. It sets investment guidelines to make sure that plan assets are managed based on the applicable statutory requirements of the fiduciary, the prudent investor rule, and the plan’s core objectives. This policy statement is used as a basic framework for decisions concerning the assets of the healthcare management plan. It provides detailed information about the plan, the asset allocation that will be carried out by the discretionary trustee, and the critical factors considered in investing the assets of the healthcare plan. Thus, a healthcare investment policy statement is adopted by the board to establish the expectations, objectives, and guidelines for the investment of all assets, set criteria to track and analyze the investment performance results fulfilled by the various investments, and comply with the applicable requirements of the fiduciary. Personal Investment Policy Statement: Many financial institutional fund managers use a personal investment policy statement to help each of their clients plan, build, and preserve their wealth. This type of statement documents a person’s specific long-term portfolio goals and parameters as it includes one’s risk tolerance, return goals, investment timeline, tax picture, investment constraints, and other personal considerations. It is made in conjunction with an individual’s personal financial plan to align his or her portfolio return goals to the income they need now and in the future according to what is defined on their financial plan. This policy statement serves as a roadmap for their ongoing investment decisions. So, this tool helps individual investors to reach their target return with the least possible risk and guarantee that their investment taxes are reduced. Nonprofit Investment Policy Statement: Several fiduciaries in today’s increasingly complex investment landscape are greatly pressured due to overseeing numerous investment pools in different fields and sectors. A nonprofit investment policy statement is an essential foundation to set an integrated and systematic oversight process for nonprofit organizations. It addresses the primary objectives, constraints, unique circumstances, and overall oversight procedures that govern activities associated with investment within the investment programs. Be clear and specific when creating this policy statement for nonprofits. This document must be reviewed periodically to make sure that all content and language represent the current fiduciary views and remain signed with long-term objectives.

Essential Components of an Investment Policy Statement

The CFA Institute published a document that states the essential components of an investment policy statement. Consider these aspects when you create your investment policy statement.

General Scope and Purpose:This section is where you will construct the context concerning the source of wealth of the investor. It defines the investor and sets forth the key roles and responsibilities of the portfolio manager. Also, it determines a risk management structure and designates core responsibility for portfolio monitoring and investment reporting. Governance:It highlights the primary responsibilities of measuring, implementing, and tracking the outcomes of the execution of the investment policy statement. Elaborate on the process connected to analyzing the IPS updating. Detail the authority in the hiring and firing of sellers linked with the portfolio. Designate major responsibility in measuring the asset allocation of the portfolio which includes the inputs utilized and the criteria adopted to create the inputs and for risk management monitoring and investment reporting. Key Investment, Return, and Risk Objectives:In this section, it defines the overall investment objective and states the return, risk, and spending assumptions. Identify the risk tolerance of the investor and elaborate relevant constraints such as legal constraints, liquidity requirements, restrictions of certain investments, tax considerations, etc. Include any other considerations that may be significant or valuable to the core investment strategy. Risk Management:This part provides specific performance measurements and reporting accountabilities. Cite metrics executed to determine and assess risk. Outline the process for portfolio rebalancing and target asset allocations.

How to Write an Investment Policy Statement

Be skilled in writing a well-coordinated investment policy statement to help you address a multitude of priorities and concerns and resolve the critical bottom line of investment performance. Follow the fundamental steps in creating this professional document for your investments.

Step 1: Detail the Scope and Purpose

Explain the context as you relate the information about the investor and the source of wealth. Describe who the investor is and indicate which of the assets of the investors are to be governed by the IPS. Then, elaborate the structure by setting the major responsibilities and actors, as well as building a care standard for the financial advisers. Build an organizational structure for investing. Indicate a risk management structure applicable to investing, designate responsibility for monitoring and reporting, and record acceptance of the IPS.

Step 2: Explain the Governance

Tell them who is responsible for determining investment policy, implementing investment policy, and tracking the outcomes of policy implementation. Briefly specify all stages of investment policy development and implementation to reinforce the obligations of financial advisers to give counsel and the obligations of principals to formally approve or disapprove of the policy. Outline the process for reviewing and updating the IPS. Detail the responsibility for engaging and discharging external advisers.

Step 3: Include Major Investment, Return, and Risk Objectives

Clarify the overall investment objective and mention the return, distribution, and risk requirements by stating the overall investment performance objective, specifying performance objectives for each asset class eligible for investment, explaining distribution or spending assumptions or policies, and setting up a policy portfolio as a basis for performance and risk assessments. Determine the investor’s risk tolerance and explain relevant constraints.

Step 4: Provide Risk Management

Set performance measurement and reporting accountabilities for reporting investment performance. Identify proper metrics for risk measurement and evaluation. Use those metrics to assess and evaluate the risk profile of investment portfolios. Outline the process which is crucial to rebalancing portfolios and target allocations. Add a short description in a separate appendix of the rebalancing policy in accordance to the proper risk management process.


What are the main sections of the investment policy statement?

The main sections of the investment policy statement are the client’s extensive investing goals and financial objectives and a comprehensive discussion of the financial advisor with the client towards attaining a set of investment goals.

What are the essential components of an investment policy statement?

The essential components of an investment policy statement are the scope and purpose, governance, investment, return and risk objectives, and risk management.

What are some examples of investment policy statements?

Some examples of investment policy statements are university investment policy statements, foundation investment policy statements, investment management policy statements, board members investment policy statements, cash investment policy statements, college investment policy statements, teachers investment policy statements, health care investment policy statements, equity investment policy statements, employees investment policy statements, municipal investment policy statements, company investment policy statements, house investment policy statements, and nonprofit investment policy statements.

What is an investment policy statement for an individual investor?

An investment policy statement for an individual investor is a statement that contains general investment goals and objectives, financial investment strategies, details on asset allocation, risk tolerance, liquidity requirements, and other related information.

What is the importance of an investment policy statement?

The importance of an investment policy statement is to offer proper guidance on portfolio construction and current management, to keep the focus on the client’s mandate, and to guide in preventing deviations because of the unstable market conditions.

Whether you are creating an investment policy statement for an individual investor, equity, nonprofit, or investment management, it is integral to be well-informed on the common examples of investment policy statements, the essential components of this policy statement, and the basic steps on how to create this professional piece of writing. Access and navigate Sample.net to easily download and use our sample investment policy statement templates and other statement templates including research design statement templates, acknowledgment statement templates, and value proposition statement templates.