Client Name : James Tupper
Client Type : Individual Investor
Client Subtype : Taxable Portfolio
Age : 25 years old
State : Ohio
Tax Id : 12345678
Current Assets : $1,000,000
Modeled Return : 8.5%
1-year lost Limit (Worst case scenario) : -9.0%
The purpose of this Investment Policy Statement is to assist the Client in effectively supervising, monitoring, and evaluating the Client’s investment portfolio. This investment program is defined in the various sections by :
1. Stating in a written document the Client’s expectations, objectives, and guidelines for the investment of the entire Client’s assets.
2. Effective communication between the Client and all parties involved with the investment management decisions.
3. Establishing formal criteria to select, monitor, evaluate, and compare the results achieved by each investment upon weekly basis.
Statement of Objectives
The assets are approximately $1,000,000 in market value. Same as current assets.
The objective : Investment goals and objects are long term growth and preservation of capital.
The investment guidelines are based upon an investment horizon of greater than 20 years. The Client’s asset allocation is based upon this long-term perspective. Short-term liquidity requirements are anticipated to be non-existent or should be covered by cash inflows. Short-term liquidity requirements are expected to be minimal.
The client recognizes that some risk must be assumed in order to achieve the investment objectives of the Client. The ability to withstand short and intermediate term variable were considered. A 1-year loss limit of -9.0% has been calculated for the portfolio. Statistically speaking, there is a 2.5% chance that the 1-year return will actually be lower than -9.0%.
The desired investment objective is a long term rate of return on assets that is at least 5.4%. The target rate of return for the Client has been based upon the assumption that the future real returns will approximate the long-term rates of return experience for each asset class in the IPS. The client realizes market performance caries and a 5.4% rate of return may not be meaningful during some periods.
Asset Allocation Policy
Since the client will be taking a moderate aggressive portfolio risk, the money will be mostly divided between small cap equities and mid cap equities. These tend to have…