Portfolio Theory and Management

Portfolio Theory and Management

Investment Policy Statement

Introduction And Purpose

This Investment Policy Statement, or IPS, is meant to be your roadmap to the attainment of your long-term financial objectives. It documents your specific financial goals and needs, and matches them to your preferences, constraints and requirements, resulting in a portfolio allocation that is appropriate to your individual circumstances.

Current Investment Portfolio

This section addresses your current financial situation. It contains your net worth, taxable/non taxable breakdown, and any special situations.

Investable Assets

Total wealth is always taken into account when developing a suitable investment strategy, however, as your investment account representative, I will focus only on investments that I am licensed to advise you on.

Your current investable assets are held in high return/high risk investments.

Your investable assets (with this firm) are composed of $0.00 in taxable assets, and $67,500.00 in tax-deferred assets.

Investment Objectives And Priorities

This section documents your investment objectives and priorities as well as your investment knowledge

Investment Objectives

Your financial objectives and their time horizon are:

Financial objective:Retirement

INVESTOR PROFILE

This figure displays your investor profile in graphic format.



Your investor profile: Positive

This is a 65%/35% mix of stocks and fixed income investments, with similar weightings between Canadian and global assets. High yield international equities are the largest single portfolio component. While there is no cash, the 35% position in bonds will provide portfolio stability and steady income.

Here is each element of your profile explained in greater detail.

TIME HORIZON

I may need the total amount invested and the investment revenue from this account within the next five years.

YOU ANSWERED NO

Your time horizon is long: Your financial needs call for higher portfolio volatility as well as a higher level of long-term average returns. You have the ability to withstand relatively long periods of negative returns, as these will be more than compensated by periods of positive returns. Your financial goal is to maximize the long-term dollar value of your account, given the other elements of your financial profile.

RISK TOLERANCE

If the return from this portfolio was negative over a year, thus generating paper financial losses in the short run, I would continue to uphold my initial investment strategy.

YOU ANSWERED YES

Your downside risk tolerance level is high: You are likely to adequately withstand the emotional strain that may result from negative returns. Your understanding of investing includes the idea that higher returns are generated only by accepting to bear more volatility.

CURRENT INCOME

I will cover my current expenses without using this Portfolio.

YOU ANSWERED NO

Your ability to forgo current income is low: The investments under consideration here participate in supplementing sources of income such as your salary, working income, or other regular sources of income. Although these investments may have as primary goal to produce capital gains and/or other forms of return which are not, or will not be, part of the requirements to maintain your lifestyle, they are also meant to produce returns on an ongoing basis, and by choosing this option, you are likely to forgo higher accumulation of capital in the long run.

FINANCIAL STABILITY

My personal and financial situation allows me ...