Investment policy statement for a family office: what it sets
The essentials in 30 seconds
- An investment policy statement for a family office is the written document that records the purpose of the capital, the risk accepted and the rules for investing.
- A complete statement has 6 parts: objectives, risk tolerance, allocation ranges, limits, roles and reporting.
- The investment committee drafts it and the board approves it.
- A yearly review keeps it current as of October 2026.
- EQOS Asia offers a free 30-minute pre-diagnostic in Singapore.
An investment policy statement is the written document that turns a family’s goals into rules for investing its wealth. This page explains what the statement sets, who writes it and how it works for a family office, as of October 2026, within family governance. It serves families in Singapore, ASEAN and Hong Kong. This page is general information, not legal, tax or investment advice.
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What is an investment policy statement for a family office?
An investment policy statement, often shortened to IPS, is a document that records how a family office invests. It states the purpose of the capital, the level of risk the family accepts, the mix of assets it targets and the rules for choosing and monitoring managers. The IPS speaks for the family in calm markets and in turbulent ones.
The statement sets rules before emotions arrive. When prices fall, a family can open the IPS and check what it agreed to do. This habit reduces rushed sales and rushed purchases. The IPS also gives new team members and advisers one source for the family’s expectations, which speeds up their work and reduces misunderstandings.
Which sections does an investment policy statement contain?
A complete IPS has 6 parts: objectives, risk tolerance, allocation ranges, limits, roles and reporting. Objectives describe what the money is for. Risk tolerance states how much loss the family can accept in a year and over a cycle. Allocation ranges give a target and a band for each asset class, and limits cap concentration, illiquid assets and currency exposure.
Roles name who proposes, approves and executes each type of action, and reporting lists what the family receives and when. Many offices add a section on values, such as responsible investing or exclusions, and a section on liquidity needs for taxes, spending and family support. Each part fits on one page, so the whole IPS stays readable.
How does an investment policy translate family goals into rules?
Start from the use of the capital. Some funds support family spending over decades, some fund a business, a property or a philanthropic goal, and some are reserved for future generations. Each purpose has its own time horizon and tolerance for loss, so the IPS can define separate portfolios or buckets with their own rules.
Then translate each purpose into measurable terms: the spending the portfolio must support, the loss the family can accept in a bad year, the time before money is needed and the share that must stay liquid. These measures form the objectives section. They also give the committee a yardstick to judge a proposal before it spends time on the details.
What allocation ranges and limits belong in an investment policy statement?
Allocation ranges set a target and a minimum and maximum for each asset class, such as listed equities, bonds, private investments, real estate and cash. A band lets the office rebalance without a vote each time prices move. A drift beyond the band triggers a review and a documented decision.
Limits control the exposures that surprise families most often: concentration in a single holding or manager, illiquid commitments that cannot be sold quickly, and currency exposure across USD, SGD, HKD and JPY. A liquidity floor ensures that cash needs for the next 12 months stay covered. Each limit states its measure, its threshold and who is informed when it is crossed.
Who writes, approves and applies the investment policy statement?
The investment committee drafts the IPS with the head of the office and, where available, an independent adviser. Family members give input on goals and values through the council. The board approves the final text, and the document is signed and dated. Shared authorship builds ownership, and ownership supports discipline when markets move.
The office team applies the IPS every day, and the committee checks compliance at each meeting with a short report: allocation against ranges, limits crossed, exceptions granted and actions taken. External managers receive the relevant sections as part of their mandates. An exception log records any decision that departs from the IPS, with the reason and the approver.
How often should a family office review its investment policy statement?
Review the IPS once a year and after any major event, such as a sale of the family business, a large inheritance, a change in family needs or a move to another country. The review checks that objectives still match the family’s goals and that ranges and limits still fit the size and mix of assets.
Keep changes deliberate. A policy that moves with every market swing offers little discipline, and a policy that never changes loses touch with the family. The committee proposes changes with reasons, the board approves them and the version history shows the family how the policy evolved. The annual review also feeds the report to the family assembly.
How can a family office draft its first investment policy statement?
Begin with a 2-page IPS that covers objectives, risk tolerance, ranges, limits and roles. Test it on 3 past decisions to see whether it would have guided the family well. Refine the wording, then adopt it formally. A short, tested IPS beats a long document that nobody opens.
EQOS Asia supports decision makers in Singapore, ASEAN and Hong Kong with structured analysis of family decisions. Book the free 30-minute pre-diagnostic (EQOS Asia private page, 2026) or see how EQOS Asia scores a decision on the method page. Qualified investment and legal advisers prepare the final text. This page is general information, not legal, tax or investment advice.
See also in this guide
Frequently asked questions
What is an investment policy statement?
An investment policy statement is a written document that records the purpose of a family’s capital, the risk it accepts, the target mix of assets, the limits on exposure and the roles of the people involved. It gives the family office a stable reference for investment decisions in every market.
Is an investment policy statement legally binding?
The IPS is mostly an internal governance document. Its legal force depends on how the family and its advisers adopt it and on the law that applies, and managers may accept parts of it in their mandates. Qualified counsel confirms the effect in each jurisdiction before the family relies on it.
How long should an investment policy statement be?
A policy of 2 to 6 pages works for many family offices. Each of the 6 parts fits on about one page, with annexes for detailed limits or manager lists. A short document gets read at every committee meeting, and a long one tends to stay on the shelf.
Who signs the investment policy statement?
The board approves the IPS, and the chair signs it with the date and version number. Many families also ask the head of the office and the chair of the investment committee to sign, which shows that the people who apply it have read it. The signed copy goes to the file.
Test your knowledge
1. What does an investment policy statement record?
- How a family office invests
- Holiday plans
- Staff birthdays
Show the answer
How a family office invests.
2. How many parts does a complete IPS have in this guide?
- 2
- 6
- 60
Show the answer
6.
3. What does an allocation band allow?
- A vote on every price move
- A ban on rebalancing
- Rebalancing without a vote each time
Show the answer
Rebalancing without a vote each time.
4. Who approves the final text of the IPS?
- The board
- A manager
- A stranger
Show the answer
The board.
5. How often should the IPS be reviewed at the minimum?
- Every 20 years
- Once a year
- Never
Show the answer
Once a year.
About the author
Stéphane Jambu
President, EQOS Forecast Asia
Stéphane Jambu leads EQOS Forecast Asia and works as a consultant in e-commerce, search visibility, and AI. LinkedIn profile
Sources: EQOS Asia private page (eqos-asia.com/private.html), EQOS Asia method page (eqos-asia.com/method.html), consulted on 23 October 2026. Page updated on 23 October 2026.