Institutional Investment Policy Statement (IPS) Template

Investment Policy Statement (Institutional): [Fund or plan name]

The governing investment policy for an institutional asset owner: a defined benefit or defined contribution pension plan, an endowment, a foundation, an insurer's general account or a sovereign or public fund. It sets who decides what, the return objective, the risk tolerance and risk budget, the constraints, the strategic asset allocation with ranges and benchmarks, rebalancing, manager selection and monitoring, responsible investment and stewardship, risk controls, performance reporting and the review cycle. Based on the prudence and statement-of-policy duties in ERISA section 404(a) and 29 CFR 2550.404a-1 (US plans), UPMIFA section 3 (US endowments), the Pensions Act 1995 section 35 and the Occupational Pension Schemes (Investment) Regulations 2005 regulation 2 (UK statement of investment principles), Directive (EU) 2016/2341 (IORP II) Articles 19, 25 and 30 and Directive (EU) 2017/828 (SRD II) Articles 3g and 3h, as in force in October 2026. Replace every [bracketed] value and every row marked Example. This is a document format, not financial, investment, tax, legal or accounting advice. Obtain the standard or law for the normative text.

Document control

Approvals

Revision history

Contents

• 1. Purpose and scope
• 2. Legal and regulatory basis
• 3. Governance and responsibilities
• 4. Investment objectives
• 5. Risk tolerance and risk budget
• 6. Constraints
• 7. Strategic asset allocation, ranges and benchmarks
• 8. Rebalancing policy
• 9. Manager selection, monitoring and termination
• 10. Responsible investment, stewardship and voting
• 11. Risk management and permitted instruments
• 12. Performance measurement and reporting
• 13. Costs, conflicts and service providers
• 14. Compliance monitoring, breaches and review
• 15. Glossary and references
• Standard and licence note

1. Purpose and scope

This Investment Policy Statement sets out the policies that the [board or trustees] of [Fund or plan name] (the "Fund") follow when investing the Fund's assets. It exists to:

1. Record the investment objectives, risk tolerance and constraints the board has agreed, and the reasons for them.
2. Allocate responsibilities among the board, the investment committee, staff, the investment adviser, investment managers and the custodian.
3. Set the strategic asset allocation, permitted ranges and benchmarks against which implementation is judged.
4. Provide a written standard for monitoring, so that the board can show it acted prudently and can detect drift early.
5. Serve, where required, as the statutory statement of investment principles or statement of investment policy principles (section 2).

In scope: [All assets of the Fund held in trust account [number], including the [defined benefit section], [operating reserve] and any assets held with investment managers or in pooled funds.]

Out of scope: [Member-directed DC investment options, which are governed by the [DC investment policy]; sponsor assets; administrative bank accounts below [amount].]

The three pools in the example sum to EUR 1,080.0m and correspond to the policy portfolio in section 7 (return-seeking: global equity, private equity and real assets; liability-hedging: investment grade credit and long government bonds; liquidity: cash).

2. Legal and regulatory basis

Status as of 2026-10. Check local law and the consolidated texts before adoption.

Where the IPS serves as a statutory statement (UK SIP or EU SIPP), keep the cross-reference table below up to date so the regulator or auditor can find each required item.

3. Governance and responsibilities

R = responsible, A = accountable, C = consulted, I = informed.

Delegated authority. The board delegates to the investment committee the authority set out in [committee terms of reference]. The CIO or OCIO may, without prior committee approval: rebalance within the ranges in section 7; allocate between approved managers within an asset class; execute currency and interest-rate hedges within the limits in section 11; and redeem from a manager on the watch list when a termination trigger in section 9 is met, reporting at the next meeting.

Competence and training. Committee members complete [induction training] within [six] months of appointment and at least [number] hours of investment training per year. The committee assesses its own effectiveness every [year].

Quorum and records. A quorum is [number] members including [one] independent member. Every decision is minuted with the papers relied on, the advice received and any dissent.

4. Investment objectives

Primary objective. [Reach full funding on a [technical provisions / low-dependency] basis by [year] while keeping the probability of requiring additional sponsor contributions below the level in section 5.]

Secondary objectives.

1. [Pay all benefits and expenses when due without forced sales.]
2. [Outperform the policy benchmark, net of fees, over rolling five-year periods.]
3. [Maintain an interest-rate and inflation hedge ratio within the range in section 11.]

Return target. The Fund's required return is the growth rate of the liabilities plus the excess return needed to close the deficit over the recovery horizon:

where $r_L$ is the liability discount rate, $\Delta$ the required excess return and $\pi$ expected inflation.

For an endowment or foundation, replace the liability rate with the spending rate plus inflation plus costs, for example a spending rate of [4.0]% plus inflation of [2.0]% plus costs of [0.6]%, and state the smoothing rule used by the spending policy.

5. Risk tolerance and risk budget

Ability to bear risk. [Funded ratio 90.0% on the technical provisions basis; sponsor covenant assessed as [strong] in [covenant review, date]; benefit outflows of about [3]% of assets a year; liability duration about [16] years.]

Willingness to bear risk. [The board accepts a lower expected return in exchange for a smaller chance of a deficit that would require contributions above EUR [amount] a year.]

Surplus value at risk at the 95% level over one year, as used in RB-002:

where $\mu_S$ and $\sigma_S$ are the expected value and volatility of the surplus return relative to assets $A$. The method, assumptions and current values are documented in the Strategic Asset Allocation Study (finance/strategic-asset-allocation-study). In the example the recommended policy portfolio has $\sigma_S$ = 12.22% and $\mu_S$ = 1.86%, so SVaR is (1.645 x 12.22% minus 1.86%) x EUR 1,080m, about EUR 197m, within the RB-002 limit.

6. Constraints

Illiquid asset ceiling. Private equity, private credit, real assets and other assets without at least [monthly] liquidity may not exceed [25]% of total assets at commitment-adjusted value. In the example, the policy portfolio holds 8% private equity and 12% real assets, 20% in total.

7. Strategic asset allocation, ranges and benchmarks

The strategic asset allocation below was approved on YYYY-MM-DD on the basis of [SAA-001]. Targets sum to 100%.

Capital market assumptions for these classes, the efficient frontier and the alternatives the board rejected are in the SAA study. With those assumptions the policy portfolio has an expected arithmetic return of 5.42% a year, expected volatility of 8.84% and an approximate geometric return of 5.03%, or about 4.58% after fees of about [0.45]%, above the 4.20% net target in section 4.

Currency. Target hedge ratio for foreign-currency exposure in [global equity: 50%; fixed income and real assets: 100%], range plus or minus [10] percentage points.

Benchmark changes. A benchmark may change only by committee decision with the reason minuted. Performance history is chain-linked, never restated.

8. Rebalancing policy

Method. [Range-based with quarterly review.] When an asset class is outside its range at month end, the CIO or OCIO rebalances it [to the target / halfway to the target] within [20] business days, using in order: (1) benefit cash flows and contributions, (2) futures or swaps overlays within section 11 limits, (3) physical transactions.

Exceptions. Private assets are rebalanced through the commitment pacing plan, not by sales. A range breach caused only by a private-asset valuation is reported but not traded.

Costs. Estimated transaction costs and market impact are recorded for every rebalancing trade above EUR [5]m.

9. Manager selection, monitoring and termination

Selection. Every new manager or pooled fund passes investment and operational due diligence recorded in a Manager Due Diligence Report (finance/manager-due-diligence-report), covering: firm and ownership, team and key-person risk, process and its repeatability, performance and attribution, risk management, operations and valuation, compliance and regulatory history, cybersecurity and business continuity, responsible investment, fees and terms. The committee approves each hire with an Investment Committee Memo (finance/investment-committee-memo).

Arrangements with managers. Each investment management agreement or side letter states: the mandate and benchmark; guidelines consistent with section 11; reporting content and timing; voting and engagement expectations from section 10; fee basis; and the review horizon. To meet SRD II Article 3h where applicable, the Fund records how the arrangement aligns the manager's horizon and incentives with the liabilities, how performance and fees are evaluated over [three to five] years, and how portfolio turnover and turnover costs are monitored.

Monitoring. Managers report monthly holdings and quarterly commentary. The OCIO reviews each manager quarterly against the criteria below.

Termination. A manager on the watch list for [four] quarters without improvement, or any manager with a critical operational or integrity failure, is recommended for termination. Transition is managed by [transition manager] with a documented pre-trade cost estimate and a post-trade report.

10. Responsible investment, stewardship and voting

Financially material factors. The Fund treats environmental, social and governance factors, including climate change risk, as investment risks and opportunities to the extent they are financially material over the Fund's time horizon. Managers must explain how they integrate them. For US ERISA plans, such factors are considered only where relevant to risk and return, consistent with LEG-003. For EU IORPs, the Fund describes how ESG factors are taken into account as required by IORP II Article 30 and publishes the SFDR entity disclosures (LEG-012).

Non-financial matters. [The board takes members' views into account only where it has good reason to think members would share the concern and the decision does not risk significant financial detriment.] [State the jurisdiction-specific test that applies.]

Exclusions. [List any exclusions and the reason for each: legal prohibition (for example, controversial weapons banned under national law), reputational, or financial.]

Stewardship and voting. Voting rights are exercised for all holdings where practicable. [Managers vote under their own policies, which the Fund reviews annually / the Fund votes under its own policy through [proxy service].] The Fund follows its Proxy Voting Policy (compliance/proxy-voting-policy) and reports annually in its Stewardship Report (finance/stewardship-report). Detailed beliefs, integration approach, exclusions, climate targets and escalation are in the Responsible Investment Policy (finance/responsible-investment-policy).

11. Risk management and permitted instruments

Interest-rate and inflation hedging. The hedge ratio is measured as the PV01 of hedging assets divided by the PV01 of liabilities. In the example, liability PV01 is EUR 1.92m (EUR 1,200m x modified duration 16 x 0.01%); long government bonds (EUR 248.4m, duration 20) and credit (EUR 216.0m, duration 6) together supply EUR 0.63m (0.50 plus 0.13), a hedge ratio of about 32.6%, inside the RB-004 range.

Risk register. Investment risks are recorded in the Risk Register (compliance/risk-register) with owner, controls and residual rating, and reviewed with the committee [twice a year].

12. Performance measurement and reporting

Returns are time-weighted, calculated by [the custodian] monthly with daily valuation of liquid assets, and geometrically linked:

where $V_t$ is market value, $CF_t$ the external cash flow in period $t$ and $w_t$ the fraction of the period the flow was invested. Private assets are reported with money-weighted returns (IRR) and multiples as a supplement. Returns are reported gross and net of all investment fees.

Attribution follows the method in Performance Attribution Report (finance/performance-attribution-report).

13. Costs, conflicts and service providers

Costs. The Fund collects total cost data annually for every mandate: management fees, performance fees, fund expenses, transaction costs and custody. The target total investment cost is [0.45]% of assets a year, reported against peers [where data exist].

Conflicts. Board and committee members declare interests at each meeting. An OCIO that also manages underlying funds discloses which allocations go to its own products and the fees earned; such allocations need [independent adviser] review. Gifts and hospitality from managers above [amount] are recorded in the conflicts register.

14. Compliance monitoring, breaches and review

Review cycle. The committee reviews this IPS at least every [three] years, and without delay after: a new SAA study; a change in funding level of more than [10] percentage points; a change in sponsor covenant, benefit design or law; or a change of OCIO or adviser. Each review takes written advice and, where required, consults the sponsor. The outcome is recorded in the revision history, even when nothing changes.

15. Glossary and references

15.1 Glossary

15.2 References

Standard and licence note

Based on public law: ERISA sections 402 and 404 and 29 CFR 2550.404a-1 (US federal works, public domain), the Uniform Prudent Management of Institutional Funds Act section 3 as enacted by US states, the UK Pensions Act 1995 and the Occupational Pension Schemes (Investment) Regulations 2005, and Directives (EU) 2016/2341 and 2017/828 and Regulation (EU) 2019/2088 (EUR-Lex, reuse with acknowledgement). Article and section numbers are cited and duties are summarised in original wording; no legal text is reproduced. The CFA Institute position paper on institutional IPS elements is named as background only; no content from it is used, and this template is not affiliated with or endorsed by CFA Institute. The structure and text are original. Check the current official versions, the consolidated texts and your national law before use, especially the pending US Department of Labor rulemaking and SFDR 2.0. This is a document format, not financial, investment, tax, legal or accounting advice. Template licence: MIT.