Investment Policy Statement

An investment policy statement is a written record of what your portfolio is for, the limits it has to respect and who makes decisions, which you consult before adding or reviewing an investment.

Why an investment policy statement matters to your portfolio

Commitments can outlast the circumstances you made them in. Without a shared record, you and your family may hold different assumptions about what the money supports, when it might be needed and who decides. Writing a policy won't prevent losses or make locked-up capital accessible; it makes the reasoning visible.

The statement ties private holdings to your spending, your work choices, your family obligations and any business or property exposure you already carry. That context comes before any comparison between asset categories is useful.

It can explain why you're considering angel, venture, private equity, private credit, real assets or small-business exposure, and it can record why no new commitment fits right now. The private market portfolio map sets out the wider view.

How an investment policy statement is used

One interview suggests asking what the money is meant to do, how long it can be tied up and whether access may be needed if circumstances change before reviewing a deal. The template below follows those questions.

Use these blank prompts as a starting record:

• What the portfolio is meant to support: ______.
• The limits decisions must respect: ______.
• Who decides and who keeps the record: ______.
• Allocation targets, if you've set them separately: ______.
• Cash needs and the dates that matter: ______.
• Changes in circumstances that would trigger a review: ______.

Example: you've written that your portfolio exists to give you flexibility around work. Then your situation changes and access to cash matters more. You go back to the purpose statement and record the new limit before looking at any further commitment.

The family investment policy guide develops these questions.

Common mistakes

Copying an institutional policy imports assumptions about staff, cash needs and responsibilities that don't describe you. The document should make your own reasoning readable.

Writing aspirations without limits is the next mistake. "Support future spending" leaves the question of locked-up capital unanswered. A statement also stops being useful when nobody owns it or circumstances change and nobody updates it.

The statement organizes your judgment. It isn't a recommendation for any security, and it doesn't establish safety, suitability or future results.

Related terms

Concentration risk links the policy to exposures you already share across holdings. Liquidity risk is the chance that you can't get to money when you need it.

Source notes

The goal and liquidity questions are paraphrased from an interview; the template is our own.