Investment Committee Memo Template

Investment Committee Memo: [Proposal title]

Decision record for one investment proposal put to an investment committee (IC): the decision requested, the thesis, fit with the mandate or investment policy statement, valuation and expected return, risk and position sizing, diligence findings, ESG and stewardship, alternatives, sell discipline, conflicts and compliance sign-off, and the minuted vote. It works for any asset class (listed equity, bonds, funds, real assets) and for institutional, family-office and student-managed funds. Based on common investment governance practice and on the US adviser record-keeping rule (17 CFR 275.204-2) and the EU MiFID II record-keeping framework, cited by number. Replace every [bracketed] value and every row marked Example. This is a document format, not financial, investment, tax, legal or accounting advice; obtain the rule, law or policy for the normative text.

Document control

Approvals

Revision history

Contents

1. Decision requested
2. Executive summary
3. Investment thesis
4. Fit with mandate and investment policy
5. Valuation and expected return
6. Risk analysis and position sizing
7. Key diligence findings
8. ESG and stewardship
9. Alternatives considered
10. Exit, sell discipline and monitoring
11. Conflicts, compliance and record keeping
12. Committee discussion and decision record
13. Follow-up and post-decision review
14. Glossary and references
15. Standard and licence note

1. Decision requested

State exactly what the committee is asked to approve. The decision must be specific enough for the trading desk and for compliance to act on it without reading the rest of the memo: instrument, direction, target size, maximum size, execution window and any conditions.

Example: Approve the initiation of a position in Halvard Tools ordinary shares in the Kestrel Bay Global Equity strategy at a target weight of 2.0% of NAV (USD 24m on NAV of USD 1,200m), maximum 3.0%, built over up to 10 trading days with participation capped at 20% of average daily volume, under the IC terms of reference section 4.2 (new positions above 1.0% of NAV require IC approval). The sponsor's stock pitch proposed 4%; the size was reduced to 2.0% after the risk review of the bear case and the upside/downside ratio (section 5).

2. Executive summary

Summarise the proposal in five to eight sentences. Cover the recommendation, the core reason the market is mispricing the asset or the reason the asset belongs in the portfolio, the expected return with its range, the main risk and how the size limits it, and any open conditions.

Example: Halvard Tools is a fictional listed maker of professional power tools whose margin recovery is under-priced because the market extrapolates a two-year dealer destocking cycle and a margin trough. The probability-weighted 12-month expected total return is 19.5% in EUR (price 17.3%, dividend 2.3%) against a bear case of minus 28.6% before dividend. A 2.0% position raises the strategy's ex-ante tracking error from 3.10% to 3.25%, inside the 4.0% budget. The main risk is a second year of channel destocking; the stop-review trigger in section 10 limits it. The base-to-bear ratio is below 1 (0.83), so the case rests on the probability-weighted return rather than on a skewed payoff, and the size reflects that.

3. Investment thesis

Describe the variant view: what consensus expects, what the team expects, why the difference exists and which catalyst will close it. Each thesis point needs evidence and a measurable signpost that will be monitored in section 10.

Add a short narrative under the table covering the business model, the competitive position and the reason the opportunity exists now. Keep the full company analysis in the research report and link it here.

4. Fit with mandate and investment policy

Test the proposal against the governing document: the investment policy statement (see Investment Policy Statement for Institutional Investors, finance/investment-policy-statement-institutional), the fund prospectus or offering memorandum, the investment management agreement or the student fund's charter. Use pro forma figures (after the trade at maximum size).

Explain how the investment contributes to the portfolio objective (return target, income, diversification or liability hedge) and state whether it substitutes for an existing holding. For individual client mandates, the suitability evidence lives in the client file; refer to it rather than repeating personal data here.

5. Valuation and expected return

Summarise the valuation methods used (for example discounted cash flow, trading multiples, sum of the parts, yield or spread analysis for credit, net asset value for funds) and the key assumptions behind each. The detailed work belongs in the Valuation Report (finance/valuation-report) or the Comparable Companies Analysis (finance/comparable-companies-analysis).

Expected return is the probability-weighted sum of scenario returns:

The upside/downside ratio (a reward-to-risk ratio, not the capture ratios used to compare a manager with a benchmark) compares the base-case gain with the bear-case loss:

Example check: 0.25 x 63 + 0.50 x 52 + 0.25 x 30 = 49.25; 49.25 / 42.00 minus 1 = 17.3%. Adding the expected dividend of EUR 0.95 (the 2027E dividend per share in the equity research report, 2.3% of the price) gives a 12-month expected total return of 19.5% in EUR. Upside/downside ratio: (52 minus 42) / (42 minus 30) = 0.83; measured from bull to bear it is 21 / 12 = 1.75. The base value per share is (3,300 x 17% x 12 minus 480) / 120 = EUR 52.10, rounded to EUR 52. The sell-side research on the same company (finance/equity-research-report) has a Hold rating with a target of EUR 44.70; record why the team disagrees (here, the 12x multiple on FY2028E EBITDA: the house DCF of EUR 39.30 in finance/valuation-report uses a similar operating forecast) and treat the gap as a risk to the timing of the thesis.

State what the current price implies (reverse valuation): for the example, EUR 42.00 with 120m shares and net debt of EUR 600m gives an enterprise value of EUR 5,640m, or 12.5x FY2026 EBITDA of EUR 450m and 10.9x the consensus-style FY2027E EBITDA of EUR 519.8m, close to the peer median of 11.5x NTM. The market already prices a partial recovery; the variant view is about FY2028, when the base case puts EBITDA at EUR 561m (10.1x at today's enterprise value). Record the hurdle the committee applies (for example expected total return above the strategy's benchmark expected return plus a margin) and whether the proposal clears it.

6. Risk analysis and position sizing

6.1 Risk register for the proposal

6.2 Position sizing

Explain the sizing logic. Common inputs are the bear-case loss as a share of NAV, the marginal contribution to tracking error or volatility, correlation with existing holdings and liquidity.

Days to build or liquidate a position:

where $Q$ is the position in shares, $\pi$ the maximum participation rate and ADV the average daily volume in shares.

6.3 Stress and scenario results

Show the portfolio effect of the relevant stresses (equity market fall, rate shock, sector shock, currency move) with and without the position. Name the risk model and its version so the numbers can be reproduced. Where a model is material, its governance follows the firm's model risk policy.

Example: in the risk model's European equity market fall of 20%, the strategy loses 19.2% without the position and 19.3% with it, because Halvard's beta of 1.10 is close to the portfolio's. A sector shock to industrials of minus 15% adds 0.5 points of relative loss at the maximum size. A 10% fall in EUR against USD costs about 0.2% of NAV at the target size before any offsetting exposure elsewhere in the portfolio. State which of these results the committee should weigh most and why; for a cyclical single stock it is usually the sector shock, not the market fall.

7. Key diligence findings

Summarise the diligence performed and its results. For listed securities this usually covers filings and accounts, management and investor relations meetings, channel checks, expert calls (through an approved expert network, with compliance controls on material non-public information), and accounting quality review. For funds, link the Manager Due Diligence Report (finance/manager-due-diligence-report).

List items not yet verified and how they will be closed. An open item that could change the decision should become a condition in section 12.

Report diligence that weakens the case with the same weight as diligence that supports it. In the example, two of eight distributors still report inventory above the seasonal norm, and the sell-side analyst covering the stock rates it Hold; both belong in the memo, because a committee that sees only confirming evidence cannot judge the probability it is asked to accept.

8. ESG and stewardship

Identify the sustainability factors that are financially material for this asset and how they affect the thesis or valuation. Confirm the proposal against the firm's Responsible Investment Policy (finance/responsible-investment-policy) and, where relevant, the product's sustainability disclosures (for example an EU fund's pre-contractual disclosures under the SFDR as currently in force).

State the voting and engagement approach for the holding and refer to the Stewardship Report (finance/stewardship-report) where outcomes are reported.

9. Alternatives considered

List the alternatives the team considered and why this proposal is preferred. Include "do nothing" and the funding source (cash, trim of a named holding, or a reduction in a sector overweight).

Funding source (Example): trim the cash buffer from 3.0% to 1.0% of NAV, within the 0.5% minimum cash rule.

10. Exit, sell discipline and monitoring

Set the exit rules and the monitoring plan before the trade. Triggers should prompt a documented review, not an automatic sale, unless the mandate requires automatic action.

Monitoring KPIs and cadence: list the operating and market indicators (for the example: channel inventory weeks, gross margin, price-cost spread, net leverage) with the review frequency and the forum where they are reported.

11. Conflicts, compliance and record keeping

Record the conflicts check and the compliance pre-clearance. Refer to the firm's Conflicts of Interest Register (compliance/conflicts-of-interest-register) and its code of ethics and personal trading rules (Investment Adviser Code of Ethics, compliance/investment-adviser-code-of-ethics).

11.1 Regulatory record-keeping references (as of 2026-10; check local law)

12. Committee discussion and decision record

12.1 Attendance and quorum

Example: quorum under the terms of reference is four voting members including the chair or a deputy. Five eligible voting members were present after one recusal; quorum met.

12.2 Discussion summary

Record each material challenge, the answer and whether it changed the proposal.

12.3 Vote and decision

13. Follow-up and post-decision review

Track the conditions and the execution, then schedule a post-decision review at a fixed date (for example 12 months after approval or on exit). The review compares outcomes with the thesis points and scenarios, separates process quality from outcome, and feeds the committee's annual review of its decision record.

Common errors to avoid in the whole memo: a decision sentence that the trading desk cannot execute without asking questions; limits tested on the current portfolio rather than pro forma; scenarios whose probabilities do not sum to 100% or whose bear case is barely below the price; returns quoted in the security's currency without saying whether currency risk is hedged; and minutes that record a unanimous vote with no question asked. Each of these weakens the memo as evidence of a prudent process, which is its main purpose.

13.1 Variants by asset class and investor type

14. Glossary and references

14.1 Glossary

14.2 References

Standard and licence note

Based on common investment governance practice and on public law cited by number: the US Investment Advisers Act of 1940 and SEC rules in 17 CFR Part 275 (US government works), and EU legislation on EUR-Lex (reuse authorised with acknowledgement of the source). No rule text is reproduced; obligations are summarised in original words. No professional body's curriculum, code or template is used. Halvard Tools and Kestrel Bay Capital are fictional, and nothing here is a recommendation on any security. This template is original text written for this collection; check the current official versions of the cited rules before use. Template licence: MIT.