Explain the importance of an investor policy statement (IPS) and identify the risk objectives, return objectives, and constraints a client may face.
- Introduction
- Describe the reasons for a written investment policy statement (IPS)
- Describe the major components of an IPS
- Describe risk and return objectives and how they may be delivered for a client
- Distinguish between the willingness and the ability (capacity) to take risk in analyzing an investor’s financial risk tolerance
- Describe the investment constraints of liquidity, time horizon, tax concerns, legal and regulatory factors, and unique circumstances and their implications for the choice of portfolio assets
- Explain the specification of asset classes in relation to asset allocation
- Describe principles of portfolio construction and the role of asset allocation in the relation to IPS
- Describe how environmental, social, and governance (ESG) considerations may be integrated into portfolio planning and construction