9/28/2026 10:38 PM (PST)

An investment policy statement can provide a structured framework for deciding how capital should be allocated across different investment categories. Instead of making investment decisions on an individual basis, investors can use the document to establish objectives, risk parameters, liquidity requirements, investment time horizons, diversification guidelines, and acceptable asset classes. This can be particularly useful when evaluating alternative investments because private assets may have different liquidity and holding period characteristics than publicly traded securities. For example, an investor considering life settlements could establish guidelines for the percentage of the portfolio allocated to the strategy, acceptable policy characteristics, diversification requirements, expected holding periods, and reporting standards. An investment policy statement can also provide a reference point for reviewing whether a new opportunity continues to align with the investor's original objectives. It is not a guarantee of investment performance. Instead, it serves as a decision-making framework that can help investors maintain discipline and consistency over time.