Investment Policy Statement
1. Introduction
This Investment Policy Statement (IPS) outlines the guidelines and objectives for managing the diversified portfolio of our clients. This portfolio is designed to achieve long-term growth while managing risk through diversification across various asset classes, geographies, and market capitalizations.
2. Investment Objectives
The primary objectives of the portfolio are:
- Growth: Achieve long-term capital appreciation.
- Income: Provide a steady stream of income through interest and dividends.
- Preservation of Capital: Minimize the risk of significant capital loss.
3. Investment Philosophy
Our investment philosophy is based on the principles of diversification, strategic asset allocation, and disciplined rebalancing. We believe that a diversified portfolio can reduce risk and enhance returns over the long term.
4. Asset Allocation
The portfolio will be allocated as follows:
4.1 Neutral Positioning
- Equities: 60%
- Fixed Income & Cash: 40%
4.2 Equity Allocation
- Canadian Equities: 10-15%
- US Equities: 25-35%
- International Equities: 10-20%
4.3 Fixed Income Allocation
The Fixed Income portion will consist of:
- Canadian & US Investment Grade Bonds
- Government Bonds
- High Yield Bonds
The weighting of these bonds will depend on market conditions, bond yields, and spreads.
5. Diversification
The portfolio will be diversified across asset classes, geographies, and market capitalizations to reduce risk and enhance returns. The diversification strategy will include:
- Asset Class Diversification: A mix of equities, fixed income, and cash.
- Geographic Diversification: Investments in Canadian, US, and International markets.
- Market Capitalization Diversification: Exposure to large-cap, mid-cap, and small-cap stocks.
6. Risk Management
Risk management is a critical component of our investment strategy. We will employ the following measures:
- Strategic Asset Allocation: Maintain the target asset allocation to manage risk and achieve the desired return profile.
- Rebalancing: Periodically rebalance the portfolio to maintain the target asset allocation.
- Diversification: Spread investments across various asset classes, geographies, and market capitalizations to reduce specific risks.
7. Monitoring and Review
The portfolio will be monitored on an ongoing basis and reviewed at least annually to ensure alignment with the client’s objectives and risk tolerance. The review process will include:
- Performance Review: Evaluate the portfolio’s performance relative to benchmarks and objectives.
- Risk Assessment: Assess the portfolio’s risk profile and make adjustments as necessary.
- Market Conditions: Consider changes in market conditions, economic outlook, and interest rates to adjust the asset allocation and bond weighting.
8. Client Communication
We will maintain open and transparent communication with our clients, providing regular updates on the portfolio’s performance and any changes to the investment strategy. Clients will receive:
- Quarterly Performance Reports: Detailed reports on the portfolio’s performance, asset allocation, and market commentary.
- Annual Review Meetings: In-depth review meetings to discuss the portfolio’s performance, re-evaluate objectives, and make any necessary adjustments.
9. Conclusion
This Investment Policy Statement serves as a guideline for managing the diversified portfolio of our clients. By adhering to the principles outlined in this IPS, we aim to achieve the client’s investment objectives while managing risk and maximizing returns over the long term.