Investment Policy Statement (IPS)
An IPS is a formal policy document that codifies how an allocator manages capital, including objectives, risk constraints, and permitted investments. It provides governance continuity across leadership changes and ensures accountability.
Definition
An IPS is a formal policy document that codifies how an allocator manages capital, including objectives, risk constraints, and permitted investments. It provides governance continuity across leadership changes and ensures accountability. Allocator Context Common in pensions, endowments, and foundations, IPS documents guide asset allocation, manager selection standards, rebalancing, and reporting. Family offices may have lighter versions or “playbooks” rather than formal IPS. Decision Authority Deviations from IPS constraints often require IC approval. Day-to-day decisions occur within IPS-defined bands and rules. Why It Matters for Fundraising If a manager’s strategy violates IPS constraints (liquidity, concentration, leverage, geography), the allocation will stall even if interest exists. Key Takeaways IPS defines what’s allowed Deviations are hard and slow Screening is policy-first Fit beats persuasion