Managing Hedge Fund Managers: Quantitative and Qualitative Performance Measures

APPENDIX A

Sample Investment Policy Statement

Investment Policy Statement

 

 

The purpose of Funds is to support the mission by providing a reliable source of funds for current and future use. The Funds assets have an indefinite time horizon that runs concurrently with the existence of the family in perpetuity. As such, the investment portfolio assumes a time horizon that may extend beyond a normal market cycle and therefore may assume an appropriate level of risk as measured by the standard deviation and downside deviation of annual returns. It is expected that professional management and portfolio diversification will smooth volatility and assure a Minimum Acceptable Return (MAR). Investment of the Funds is the responsibility of the Investment Committee (Committee). The Committee recommends investment objectives and policies, recommends asset allocation, selects investment Managers, and monitors the Funds investment program. The Committee will be advised by the Family Office (FO), who will analyze investment policies and management strategies, make recommendations to the Committee, and supervise operations and investment activities. This Investment Policy should not change frequently. In particular, short-term changes in the financial markets should not require adjustments to this Investment Policy.

I. STATEMENT OF INVESTMENT OBJECTIVES

The Funds will seek to maximize long-term total returns consistent with prudent levels of risk. Investment returns are expected to preserve ...