Introduction
The aim of our investment policy statement is to outline to our clients, the aims and procedures which apply to the investors investment portfolio. We need to ensure that a clear understanding is established between MMRL Financial Advisors Limited (to be known as MMRL hereafter) and the clients. The statement will: Provide a detailed outline of the clients expectations, aims and guidelines, for the investment portfolio; Clarify which asset classes are permitted for investment, the levels of exposure and the ratios for capital allocation; Promote good communication between MMRLs financial advisors and the clients; and Draw up the framework for an asset portfolio, which is anticipated to build up adequate long term returns, at a level of risk that is satisfactory for investors.
This statement was developed with the clients specific situation and the aims of investment in mind. This investment policy statement is not a contract. This document has been drawn up as the basis of guidance for MMRLs advisors and investors.
The Portfolio
The portfolio will maintain a passive asset allocation strategy. In other words, we will initially invest the capital with the aim of achieving the clients long term goals and occasionally monitor our portfolio over time to ensure that it is moving towards this end goal. We will review our progress on a quarterly basis. The portfolio will invest across a wide range of dividend paying stocks and coupon paying bonds. We hope to build a well-diversified portfolio for our clients.
Investment Objectives
The portfolio aims to provide capital appreciation on a long term basis for the Listons who are now starting to save for retirement. They are seeking an annual return of 7.5% of the monies initially invested. They wish to generate 300,000 over 30 years. Any money generated from dividend paying stocks will be re-invested in the portfolio. Our clients have requested as a secondary wish that 10% of the total capital invested be available to them at all times and be classed as an emergency fund. Thus, we will have to invest at least 10% in highly liquid assets.
Re-balancing Procedures
The capital invested in the project will be tracked based on current market value. It is highly likely that given changes in the financial markets, we will have to adjust the weightings of our investments over time. We will review this account on a quarterly basis. If we find that our weightings have seen a change of 5% or higher, we will adjust them so that they again fall in line with our initial weightings. If for example, a stock has risen significantly enough to unbalance the weightings of our portfolio, we will have to sell some of our shares in this stock and redistribute money amongst the portfolio. If a stock has made a significant loss and affected our weightings, we may have to purchase more of this stock to re-balance the portfolio.
discuss any changes to the clients requirements. Our advisors will meet with the client on an annual basis to review the progress of investments.
Investors
The Investors must be forthcoming with all information related to net worth, risk tolerance and promptly notify the advisors at MMRL of any material changes to any of the aforementioned information. The investors must ensure that they understand all information contained in the investment policy statement and ask questions where necessary.
Adoption of Investment Policy Statement I (we) have read all material contained in the Investment Policy Statement and give it our approval for adoption. ______________________ Mr. Liston ______________________ Mrs. Liston ______________________ Representative of MMRL Financial Advisors Limited
References
http://www.jdaassociates.com/pdf/SampleSEIISP.pdf http://www.investopedia.com/terms/l/liquidasset.asp#axzz1jBhZzIoS http://en.wikipedia.org/wiki/Investment_Policy_Statement