9/28/2026 10:39 PM (PST)

What is an investment policy statement? It is a written framework that explains how an individual, family, organization, or investment committee intends to manage its portfolio. An investor may create one when establishing a long term investment strategy, receiving a significant amount of capital, working with an investment advisor, or expanding into alternative assets. The document can address investment objectives, risk tolerance, liquidity needs, time horizon, asset allocation, diversification, investment restrictions, and portfolio monitoring. For investors exploring alternatives, it can also help define the conditions under which private equity, private credit, real estate, hedge funds, or life settlements may be considered. For example, an investment policy statement could specify that an investor is comfortable with a particular percentage of illiquid investments and requires detailed reporting before allocating additional capital. Understanding what is an investment policy statement is therefore important for investors who want their investment decisions to follow a clearly documented strategy rather than being driven solely by short term market conditions or individual opportunities.