To accomplish full portfolio accountability, there needs to be a clear understanding of performance benchmarks and risk metrics as outlined in the policy statement.
- Creates a universal set of portfolio instructions applicable to all advisors.
- Encourages blending of multiple advisor "Investment Philosophies" to enhance overall portfolio diversification.
- Creates one common investment "language" for all portfolio investments.
- Sets realistic portfolio return expectations based on the "Stock-Bond" policy decision.
- Establishes a portfolio "risk budget" for all advisors that focuses on risk-adjusted returns.
- Results in maximum advisor accountability by using the "Institutional Benchmark" to measure the success of total portfolio returns.
- Provides thoughtful portfolio constraints such as liquidity, spending policy etc.