Investment Policy Statement - IPS


DEFINITION of 'Investment Policy Statement - IPS'

A document drafted between a portfolio manager and a client that outlines general rules for the manager.

This statement provides the general investment goals and objectives of a client and describes the strategies that the manager should employ to meet these objectives. Specific information on matters such as asset allocation, risk tolerance, and liquidity requirements would also be included in an IPS.

BREAKING DOWN 'Investment Policy Statement - IPS'

For example, an individual may have an IPS stating that by the time he or she is 60 years old his or her job will become optional, and his or her investments will annually return $65,000 in today's dollars given a certain rate of inflation. This would be only one of many points included in an IPS; however, it probably would also include such things as general guidelines outlining what the individual wants to leave behind to loved ones when he or she dies.

  1. Liquidity

    The degree to which an asset or security can be quickly bought ...
  2. Strategic Asset Allocation

    A portfolio strategy that involves setting target allocations ...
  3. Risk Tolerance

    The degree of variability in investment returns that an individual ...
  4. Portfolio

    A grouping of financial assets such as stocks, bonds and cash ...
  5. Portfolio Manager

    The person or persons responsible for investing a mutual, exchange-traded ...
  6. Tactical Asset Allocation - TAA

    An active management portfolio strategy that rebalances the percentage ...
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