Investment Policy Statement Esay Assignment
Order ID 53563633773 Type Essay Writer Level Masters Style APA Sources/References 4 Perfect Number of Pages to Order 5-10 Pages Description/Paper Instructions
Investment Policy Statement Esay Assignment
Assignment:
Write an investment policy statement (“IPS”) for an investment strategy of your choice. The policy should be two pages, maximum. Please take the time to think through how you would start executing the strategy on day one, and how you will manage the strategy from day to day. The sample IPS format can be used as a reference but changes may be needed for your IPS depending on the strategy you select.
Context/Purpose:
Most people think investment research is entirely about finding profitable trading signals. While that is a key point, a practitioner must understand how to translate an investment idea into a viable product, whether it be a mutual fund, separately managed account, hedge fund, ETF, etc.
The IPS can serve many important roles, including:
- Communication guide: how you talk to clients about the strategy, consistency check for marketing materials
- Behavioral guide: Plan for how to manage the strategy in multiple scenarios, especially drawdowns
- Compliance: set out your constraints in terms of markets, instruments, weights, diversification, etc.
- Operations: consistency check and guideline for daily operations
- And plenty more – not bad for a one-two page document!
2 pages paper, 12 fonts, double space
Due Jan 22
Investment Policy Statement Example
XYZ EQUITY STRATEGY FUND
Effective Date: 1/1/2016
- Purpose: This Policy will summarize the investment objectives of XYZ EQUITY STRATEGY FUND (“the Fund”) and the procedures and processes for managing the Fund. This Policy will be reviewed periodically by the PM of ABC ASSET MANAGEMENT (“ABC”).
- Fund Objective: The Fund seeks to generate positive long term returns by investing in a concentrated portfolio of U.S. equities (the “Equity Portfolio”). The Fund will seek to maintain a high positive correlation to the S&P 500 index over longer time horizons and to keep annualized volatility between 15 and 30%, while recognizing that this range may not always be achieved.
III. Roles, Responsibilities and Procedures: The PM of ABC selects equities, determines their initial allocation levels, and manages the Fund allocations and total exposure on an ongoing basis.
- Investment Philosophy: The PM will make investment decisions that seek concentrated exposure to U.S. equities while seeking to manage volatility and drawdown. The PM believes that long term growth can be achieved by selecting a concentrated portfolio of stocks selected using a “dual momentum” approach. By adhering to a strict sell discipline short term volatility and losses may be mitigated without necessarily sacrificing long-term expected return. Additionally, sector diversification may help to mitigate drawdowns to the extent that equities from multiple sectors meet the PM’s criteria for investment.
The PM will therefore strive to select stocks that:
- Have excellent standalone characteristics and
- Have high potential portfolio diversification.
- Investment Selection and Portfolio Management:
Equity Selection. The PM will select stocks that he believes to be viable options for pursuing the Fund Objective based on their Dual Momentum Rank.
“Dual Momentum Rank”: The PM has developed a proprietary dual momentum ranking method that compares each stock in the Universe based on cross-sectional momentum, time series momentum and risk. Stocks with high medium-term momentum and low risk receive high ranks, while stocks with low momentum and high risk receive low ranks. Stocks with negative medium-term time series momentum are not eligible for investment.
The PM will review existing and potential investments continually in order to maintain a concentrated portfolio of the strongest possible stocks.
Portfolio Construction and Exposure Management. The PM will attempt to allocate approximately equal risk to each stock in the portfolio. Risk is evaluated on a discretionary basis using both quantitative and qualitative inputs. Such inputs include the historical volatility of each stock and correlation with other stocks in the portfolio. At certain times such as bear markets, the PM may see few or no opportunities and take a defensive posture in the portfolio. During these circumstances the PM will have most of the assets of the Fund in cash and T-Bills. In extreme circumstances the PM may go entirely to cash for periods of time.
Investment Constraints. The Fund will generally not make an allocation above 50% or below 5% to any single stock. The Fund is long-only and will not use leverage or sell stocks short.
Investment Universe. Stocks in the Russell 3000 Index are the only stocks eligible for investment.
- Additional Guidelines: The PM may invest in the Fund after obtaining pre-trade approval from the Chief Compliance Officer of ABC.
VII. Review and Revision of the IPS: The PM will review and revise this Investment Policy Statement as needed.
RUBRIC
QUALITY OF RESPONSE NO RESPONSE POOR / UNSATISFACTORY SATISFACTORY GOOD EXCELLENT Content (worth a maximum of 50% of the total points) Zero points: Student failed to submit the final paper. 20 points out of 50: The essay illustrates poor understanding of the relevant material by failing to address or incorrectly addressing the relevant content; failing to identify or inaccurately explaining/defining key concepts/ideas; ignoring or incorrectly explaining key points/claims and the reasoning behind them; and/or incorrectly or inappropriately using terminology; and elements of the response are lacking. 30 points out of 50: The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately. Elements of the required response may also be lacking. 40 points out of 50: The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples. The answer is complete. 50 points: The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples. No aspects of the required answer are missing. Use of Sources (worth a maximum of 20% of the total points). Zero points: Student failed to include citations and/or references. Or the student failed to submit a final paper. 5 out 20 points: Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. 10 out 20 points: References to scholarly sources are occasionally given; many statements seem unsubstantiated. Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. 15 out 20 points: Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented. APA 6th Edition is used with only a few minor errors. There are minor errors in reference and/or citations. And/or there is some use of questionable sources. 20 points: Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented. APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. 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Structure of the Paper (worth 10% of total points) Zero points: Student failed to submit the final paper. 3 points out of 10: Student needs to develop better formatting skills. The paper omits significant structural elements required for and APA 6th edition paper. Formatting of the paper has major flaws. The paper does not conform to APA 6th edition requirements whatsoever. 5 points out of 10: Appearance of final paper demonstrates the student’s limited ability to format the paper. There are significant errors in formatting and/or the total omission of major components of an APA 6th edition paper. They can include the omission of the cover page, abstract, and page numbers. Additionally the page has major formatting issues with spacing or paragraph formation. Font size might not conform to size requirements. The student also significantly writes too large or too short of and paper 7 points out of 10: Research paper presents an above-average use of formatting skills. 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