What is the purpose of an Investment Policy Statement (IPS)?

The purpose of an Investment Policy Statement (IPS) is to serve as a comprehensive document that outlines the investment strategy and objectives tailored for a client. An IPS provides clear guidelines regarding the client's financial goals, risk tolerance, asset allocation preferences, and other pertinent factors that influence the investment process. This framework not only helps clients articulate their investment needs but also assists portfolio managers in making informed decisions that align with the client's objectives.

An IPS is critical for establishing expectations and can guide the investment strategy over time. It serves both as a roadmap for decision-making during volatile market conditions and as a benchmark against which performance can be measured.

While reports on historical performance, regulatory requirements, and summaries of transactions provide valuable information about the investment landscape, they do not encompass the strategic guidance and personalized approach that an IPS embodies. The IPS focuses on the future direction of investments rather than merely reflecting on past performance or fulfilling regulatory obligations.