Policy Statement

1.Introduction
A policy statement is an organization-level document that prescribes acceptable methods or behaviors.
Essentially, a policy is simply the way things are done within an organization. Policies are different from
procedures and standard operating procedures because they are applicable to an entire organization
and are primarily intended to set direction. Procedures and standard operating procedures, on the other
hand, typically include very specific instructions used to accomplish defined tasks.Well-written and -
designed policy statements are general enough that frequent revision is unnecessary. For instance,
instead of referring to a specific individual in a policy statement, position titles could be used. Good
policies are written in active voice and are easily understood. Short sentences avoid the use of jargon or
acronyms, and using clear terms like 'must,' 'required,' 'recommended,' and 'should' make policy
readable and easier to use.

Investment Objectives
An investment policy statement (IPS) is a document drafted between a portfolio manager and a client
that outlines general rules for the manager. This statement provides the general investment goals and
objectives of a client and describes the strategies that the manager should employ to meet these
objectives. Specific information on matters such as asset allocation, risk tolerance, and liquidity
requirements are included in an investment policy statement.It's standard practice for portfolio
managers to have an IPS in place for their institutional clients such as retirement plan sponsors and
mutual funds. Many financial advisors will also draft one for their individual clients as well.

STATEMENT OF YOUR FINANCIAL OBJECTIVES

Together, we selected Sample Portfolio B/Balan
most appropriate investment portfolio for you
PORTFOLIO
DESCRIPTION This portfolio recommendation is designed to g
rate of return of 2.5-3.5% above inflation, net o
current projections, this equates to a current n
PORTFOLIO RATE OF RETURN
Currently you are not taking a monthly distribu
YOUR CASH
REQUIREMENTS
Your investment period is over 10+ years
INVESTMENT PERIOD

YOUR RISK Your risk tolerance is a maximum, aggregate los

TOLERANCE time frame.

PORTFOLIO TAX STRATEGIES Your portfolio is to be managed as a taxable & t

combined federal and state tax bracket is to be
32%.
Investment Guideline
1. Investments shall be made solely in the interest of the Foundation’s beneficiaries.

2. The assets shall be invested with the care, skill, prudence and diligence under the circumstances
that a prudent person would use in the investment of assets with like character and similar
goals.

3. Investment of the assets shall be diversified to minimize the risk of capital erosion, unless under
the circumstances it is clearly inadvisable not to do so.

4. The Investment Committee may employ one or more investment managers of varying styles and
philosophies to achieve the Foundation’s goals and objectives.

5. Cash shall be invested in a productive manner through the use of short-term instruments that
provide safety, liquidity and a reasonable yield, considering prevailing market conditions.

Constraints
A business plan needs to be realistic, so it is important to set out in detail the constraints that are likely
to act as limits on business activity.

Typical constraints facing the business include:

1.The size of the market. The extent of the market determines a businesses ability to make sales. You
can't make sales if there are no customers out there.

2.The nature of demand in the market. It is important to identify the nature of your customers and their
requirements through detailed market research.

3.The availability of supply. A business often depends on supplies. For example, a clothes retailing
business needs to acquire garments, in the appropriate quantities, prices and at the right times.

4.The nature of the competition. The strength of the competition is a key constraint on business success.
Businesses need to position themselves in such a way as to limit the effect of the competition.

5.The availability of finance. Businesses need to have the right quantities of finance at the right times to
match their needs. Liquidity and cash flow are thus very important. It is necessary to have funds when
they are required to meet the pressing needs of the business.

6.The quality and skills of employees. The human resource is one of the most important resources of any
organisation. It is essential to have the right number of people with the appropriate skills to enable the
business to achieve its business objectives.

7. The quality of direction and management. Directors and managers of a business need to have the
right skills and abilities e.g. to create well structured plans, and to motivate and lead other members of
the organisation. In creating a business plan you therefore need to identify the key constraints, and to
set out plans for dealing with any pressing constraints.
Investment Horizon
Investment horizon is a term used to identify the length of time an investor is aiming to maintain their
portfolio before selling their securities for a profit. An individual’s investment horizon is affected by
several different factors. However, the primary determining factor is often the investor’s risk tolerance.

Investment horizons are a critical piece in portfolio investing because they help determine the amount
of time an investor will hold their investments to compensate for the risks that they take when
investing.

Breaking Down Investing Horizons

Individuals in their early investing years are the most likely to have longer-term investment horizons.
This is simply because they have more time to make a profit from their investments or recover from
losses sustained when taking risks. For the same reason, they are also more likely to make riskier
investments with the potential for a greater payoff down the road.Seasoned or older investors are more
likely to use a shorter horizon because they have less time to realize profits.

Time horizons for investing is a key concept in the Fixed Income Fundamentals Course, a prerequisite
for the FMVA Certificate

Three Types of Investment Horizons

1. Short-term investment horizon

First, let’s talk about the short term. This investment time frame, as mentioned above, is typically best
for individuals in their later years, preparing for retirement. It may also be appropriate for individuals
who are strongly averse to risk or need to access a significant amount of cash in the near future. A short
investment horizon usually doesn’t exceed a period of three years. For these risk-averse investors, it’s
best to have guaranteed assets or securities, including high-interest savings accounts and certificates of
deposit.

2. Medium-term investment horizon

Investors who are less risk-averse and not looking for cash for retirement or a large purchase are better
suited to a medium-term investment horizon. This usually means a period of three to ten years.
Investors with this type of investment horizon are somewhere in the middle between low and high risk,
meaning a conservative and diversified portfolio is best, mixing investments in both stocks and bonds.
The ratio of stocks to bonds should be determined by the individual’s specific wants and needs.

3. Long-term investment horizon

Finally, for investors willing to take big risks for big rewards and who have the time to wait for the payoff
or to recoup losses after risky endeavors, long-term investment horizons are often the way to go. In
most cases, the portfolio of the long-term investor includes a significant amount of risky investments
with potentially high yields. The remainder of the portfolio should then be a mix of stocks and bonds,
with the ratio leaning more heavily towards stocks.Every investor must determine the amount of risk
they are willing and able to tolerate and how much time they can devote to maintaining
their portfolio before needing to access their profits. These key elements affect the investor’s
investment horizon, which ultimately affects what they fill their investment portfolio with.

Asset allocation
Asset allocation is an investment strategy that aims to balance risk and reward by apportioning a
portfolio's assets according to an individual's goals, risk tolerance, and investment horizon. The three
main asset classes - equities, fixed-income, and cash and equivalents - have different levels of risk and
return, so each will behave differently over time.

PassMark Software’s equity portion:

Target Minimum Maximum

Cash 5.0% -10.0% 20.0%

Fixed Income 0.0% -10.0% 20.0%

Developed Markets Equity 27.0% 10.0% 50.0%

Emerging Markets Equity 6.0% 0.0% 15.0%

Hedge Funds 25.0% 15.0% 40.0%

Private Equity 15.0% 10.0% 25.0%

Venture Capital 17.0% 10.0% 25.0%

Real Assets 5.0% 0.0% 15.0%

Benchmark
PassMark Software has delved into the millions of benchmark results that PerformanceTest users have
posted to its web site and produced a comprehensive range of CPU charts to help compare the relative
speeds of different processors from Intel, AMD, Apple, Qualcomm and others.

Included in these lists are CPUs designed for servers and workstations (such as Intel Xeon and AMD EPYC
processors), desktop CPUs (Intel Core Series and AMD Ryzen), in addition to ARM processors (Apple M1
and Qualcomm Snapdragon) and mobile CPUs.

Diversification Policy
Product diversification is a strategy employed by a company to increase profitability and achieve higher
sales volume from new products. Diversification can occur at the business level or at the corporate
level.
Business-level product diversification – Expanding into a new segment of an industry that the company
is already operating in.
Corporate-level product diversification – Expanding into a new industry that is beyond the scope of the
company’s current business unit.

Diversification is one of the four main growth strategies illustrated by Igor Ansoff’s Product/Market
Matrix:

Diversification Strategies

There are three types of diversification techniques:

1. Concentric diversification

Concentric diversification involves adding similar products or services to the existing business. For
example, when a computer company that primarily produces desktop computers starts manufacturing
laptops, it is pursuing a concentric diversification strategy.

2. Horizontal diversification

Horizontal diversification involves providing new and unrelated products or services to existing
consumers. For example, a notebook manufacturer that enters the pen market is pursuing a horizontal
diversification strategy.

3. Conglomerate diversification

Conglomerate diversification involves adding new products or services that are significantly unrelated
and with no technological or commercial similarities. For example, if a computer company decides to
produce notebooks, the company is pursuing a conglomerate diversification strategy.Of the three types
of diversification techniques, conglomerate diversification is the riskiest strategy. Conglomerate
diversification requires the company to enter a new market and sell products or services to a new
consumer base. A company incurs higher research and development costs and advertising costs.
Additionally, the probability of failure is much greater in a conglomerate diversification strategy.