Our Approach

Investment Policy Statement

As much as an investment policy is about the investment, it is also about governance and mission. A strong investment policy statement (IPS) can provide continuity and stability to an organization by defining the roles and responsibilities of the board, the investment committee, the CFO and other leaders, and the investment managers. It should clearly outline the purpose and mission both of the organization and the investment fund itself—is this money intended for supporting specific programs, capital improvements, or operating budgets?—and it should state any socially responsible investing (SRI) guidelines in an actionable and measurable way. Of course, it should also specify the technical parameters of the investment portfolio, defining the asset classes and the way they are measured in terms of market benchmarks, defining risk parameters and guidelines for portfolio implementation and management, and defining specific limitations for underlying investment managers.

Many organizations are missing one or more of the components of a good, long-term investment policy statement. Often, governance and responsibilities are missing or poorly defined, or SRI or mission-related investment philosophies are not defined in a way that is both executable and measurable. During a policy review, it’s common for organizations to discover that key constituencies disagree on the objectives of the fund itself, in both relative and absolute terms.

Improving the investment policy can help maintain continuity despite turnover in trustees or staff, by providing a single document that clearly outlines the operating rules and mission. It provides a clear way to measure investment goals and to ensure that investments adhere to SRI philosophies and support the mission in the way that all parties have agreed. And it defines performance objectives for holding individual managers accountable, along with defining specific asset allocation targets and portfolio rebalancing procedures.

We collaborate with our clients to frame this document, and to review it every year to ensure that it is still in line with stated missions and objectives. On an ongoing basis, we use it to ensure that underlying managers investing on a client’s behalf are adhering to their stated guidelines. The investment policy statement is a combination of philosophy and planning, and it holds the key to each client’s success.