What does an Investment Policy Statement (IPS) include?

An Investment Policy Statement (IPS) is a crucial document in the field of finance and investment management. It serves as a roadmap for achieving an investor's financial objectives and provides a structured approach to managing their investment portfolio. The primary components of an IPS typically include guidelines for managing a portfolio and an investment strategy, which define the investor's goals, risk tolerance, asset allocation, and the methodology for selecting investments.

The IPS outlines specific criteria for investment decisions, such as acceptable investment vehicles, performance benchmarks, and any restrictions on certain types of investments. This clarity helps ensure that investment decisions are consistent with the investor's long-term objectives and risk preferences. By having a well-defined IPS, investors can maintain a disciplined approach to investing, making it easier to stay the course during market fluctuations.

In contrast to the other choices, the elements mentioned, such as a summary of past financial losses or historical revenues, do not form part of the IPS. While understanding past performance can inform future investment decisions, an IPS is focused on present and future strategy rather than historical data or projections for market performance. Such projections are often speculative and not a central component of the IPS, which aims to establish a framework for monitoring investments and adapting to changing market conditions in line with predefined guidelines.