Deliverable 5 - Investment Policy Statement

Instructions

ABC Capital Management is one of the most prestigious asset management companies in the country. It has been managing the wealth of America for over 100 years. It utilizes various forms of fundamental, technical, and quantitative analyses in the design and implementation of its several investment strategies and portfolios. Today, ABC Capital is a global investment management firm that continues to focus on rigorous research and the development of innovative, practical investment strategies. Because of this, ABC Capital is able to achieve the goals of its clients: individuals, pension funds, endowment funds, banks, insurance companies, foundations, and sovereign wealth funds.

You work as a junior portfolio manager with ABC Capital. ABC Capital has taken on a new foundation as a client. This foundation is concerned with the protection of natural resources around the world. The staff feels passionate that their investments should mirror their mission and provide a positive impact on the world. You are charged with composing the Investment Policy Statement (IPS) for the foundation. The IPS should consist of:

• Account (fund) information (use a hypothetical portfolio of your making).
• Investment objectives and policies.
• Time horizon and risk tolerance.
• Permissible asset classes, constraints, and restrictions.
• Asset allocation.
• Section for signatures.

Assume broad market returns are 8% annually and use the current 1-year treasury yield.