Group 7: Section B

Aviral Bansal 13P135

Rishi Chaturvedi 13P162
Sabbineni Anusha 13P164
Praveen Kumar 13P223
Omkar Tungare 13P240


Investment Policy Statement
A document drafted between a portfolio manager and a client that
outlines general rules for the manager such as the investment goals
and objectives of the client, investment strategies to employ and
specific information on matters such as asset allocation, risk tolerance
and liquidity requirements.
Introduction
What are the contents of an Investment
Policy Statement?
What is the purpose of a policy
statement?
Its importance in Investment
Management?
Agenda
Overview
to help client meet their financial goals
Outline Clients attitude, expectations, objectives, and guidelines in
written format
Outlining eligible asset classes and investment Strategy for
managing the Clients assets based on
Encouraging effective communication between client and advisor
Establish formal criteria to select and evaluate the performance of
money managers
Background & Purpose
Key Information
Covering information such as Client name, Tax Id , Investment Advisor
Firm, Custodian, Accountant, Attorney.
Financial Goals
Investment Objectives
Assets Covered
Current Combined Market Value
Client Advisor
Background & Purpose
Investor Risk-Return Profiles
Statement of Investment Parameters
Volatility Tolerance
Asset Class Preferences
Investment Time Horizon
Discretionary Authority
Portfolio Asset Allocation
Broad Portfolio Balance
Asset Allocation
Portfolio Rebalancing
Investor Risk-Return Profiles
Broad Portfolio Balance
Interest Generating
Investments
30%
Equity Investment 70%
Total Portfolio 100%
Asset Allocation
Short-term
Debt
Instrument
, 10%
US Bonds,
12%
Non US
Bonds, 8%
US Stocks,
25%
Non US
Stocks,
17%
Real Estate
Securities,
14%
Commodit
y Linked
Securities,
14%
Lower Limit Strategic Allocation Upper Limit
Short-term Debt
Instrument
8% 10% 12%
US Bonds 10% 12% 14%
Non US Bonds 6% 8% 10%
US Stocks 20% 25% 30%
Non US Stocks 14% 17% 20%
Real Estate Securities 11% 14% 17%
Commodity Linked
Securities
11% 14% 17%
Portfolio Rebalancing
Investor Risk-Return Profiles
Provides sufficient asset classes to diversify the
portfolio
Guide the client in developing an appropriate
portfolio asset allocation
Prudently select investment instruments
Control and account for investment expenses
Monitoring the portfolio's asset allocation and
rebalancing the portfolio
Provide detailed portfolio performance reports
Avoid prohibited transactions and conflict of
interest
Investment Advisor
Duties and Responsibilities
Manage the assets according to respective prospectus/ contract
Exercise full investment discretion with respect to buying,
managing and selling securities
Vote promptly in all proxies and related actions in the best
interests of the clients
Money Managers
Responsible for safe keeping the clients assets
Handle all incomes and payments on behalf of the clients
Settle transactions
Periodic reporting of transactions, cash activity and assets
owned to the clients
Custodian
Duties and Responsibilities
Dude create this one from the book
Modeled Portfolio Behavior
Regulatory
oversight
Stability
Of
organization
Expense
ratios/fees
Holdings
consistent with
style
Performance
Vs
Risk
Track
record
Correlation to
style or peer
group
Relative
performance
Assets
under
management
Modeled Portfolio Behavior
Monitoring of Money Managers
Ongoing review and analysis of a money manager is just as important as the due
diligence process followed for the initial manager selection.

Changes in investment professional staffing
Significant reduction or growth in assets
Change in firm ownership
Any legal or regulatory proceedings

Measuring Costs
Expense ratios or investment fees
Custody fees

Annual Review
Both Client and Advisor will review IPS at least annually to determine relevance
and feasibility of investment objectives
Adjustments are not made due to short term changes in markets


Control Procedures
Importance (IPS)
The presence of IPS helps clearly communicate to all relevant
parties the procedures, investment philosophy, guidelines and
constraints to be adhered to by the parties involved

Involves the client on those components of investment process
that have the most impact on their portfolio return and volatility

Assist the Client and Investment Advisor in effectively
supervising the management of clients assets

The presence of an IPS helps to create an environment of
transparency in the relationship between client and advisor