Investment Policy Statement (IPS)

An Investment Policy Statement (IPS) records what a portfolio is for and the limits it must keep. Family offices, foundations, endowments and US nonprofits use the name. UK charities and trusts more often say “investment policy” or “policy statement”.

A typical IPS sets objectives, risk tolerance, time horizon, liquidity needs, a strategic asset allocation with ranges, and restrictions. In England and Wales, trustees who delegate asset management must first prepare a written policy statement (Trustee Act 2000 s15). The Charity Commission expects every charity that invests to have a written policy.

Monitoring starts by turning each clause into a testable rule or a manual obligation. “No more than 5% in any single issuer” becomes an issuer concentration limit with a 5% hard maximum. “The committee reviews the policy every year” becomes an attested obligation with a due date.