The answer to Investment Policy
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Do you think working with an investment policy may prevent investors from optimizing their returns?
Is it beneficial to investors?
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Solution Summary
Whether working with an investment policy may prevent investors from optimizing their returns is discussed.
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An Investment Policy Statement is a document that outlines the process executed in a plan for making investment related decisions. Specifically it shows how investment decisions are related to the goals and objectives of a investment plan.
ERISA, the Employee Retirement Income Security Act of 1974 states that pension plans must "provide a procedure for establishing and carrying out a funding policy in a method consistent with the objectives of the plan."
For more information on ERISA, go to http://www.dol.gov/dol/topic/health-plans/erisa.htm
Parts of an IPS
1) The plan's purpose
2) The purpose of the investment policy statement
3) The Plan's investment objectives
4) Roles and responsibilities
5) Investment and manager selection
6) Investment monitoring and reporting
7) Investment manager termination
8) Participant investment education
9) Investment policy statement amendment process
10) While no single approach is appropriate for everyone, following are a number of topical areas for consideration by plan sponsors who are embarking on the development of an investment policy statement or who are considering revisions to ...
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