Asset Allocation and Policy Design
Whether renewing an existing investment policy or starting from scratch, policy design is a process. This process begins with collecting inputs from the client on the objectives of the fund along with expectations, tolerances and experiences with investments. Most portfolios have restrictions and limitations mandated by law or institutional policy that must be incorporated into a policy document.
To facilitate the development of consensus and the rationale for new policy provisions, we conduct fiduciary seminars. Most clients need a deeper understanding of fiduciary issues before proceeding. Education plays a critical role in developing the consensus to move forward.
In the first stages of design, we write a draft investment policy guideline statement, incorporating the client's preferences and specifications such as the policy goals and objectives, policy asset allocation mix, benchmark indexes, definition of allowable investments, risk policy, minimum standards of manager competence, performance goals for managers, rebalancing policy, fiduciary standards, et. al. The policy provides the primary basis for screening manager candidates and determining their eligibility for inclusion in the portfolio.