Abstract
Abstract Investment policy is the proposed long-term average risk level or asset allocation stock/bond ratio for the fund. For many trustees, appropriately defining investment policy relative to fund liabilities or use of invested assets is a major priority and significant fiduciary responsibility. An investment policy study often consists of substantial expenditures of time and capital. Many consider investment policy as the single most important investment decision for long-term investors. Investment policy is generally implemented in a core-satellite framework comprising strategic and tactical asset management mandates. A strategic asset allocation consists of an optimal risk-adjusted portfolio for a particular stock-bond mix policy and rebalancing to maintain that policy. Strategic asset allocations represent a core investment strategy that are generally based on relatively long-term risk-return relationships relative to liquid, diversified, and economically representative fixed and non- fixed income global capital market indices, often implemented with index funds. Long-term investors consider strategic asset allocation funds the investments of choice because they are designed to optimally enhance long-term compound return on a risk-adjusted basis.
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