Investment policy Statement
Introduction, Scope and Purpose
This investment policy (IPS) provides the framework for the management of the investment in the commodity market, which includes the several sectors, like medical, oil and gas, agriculture, etc. and also investment in the stock market, which includes shares, bonds, debentures etc. the purpose of a policy statement is to document the investment management process by
- Identify the key role and responsibilities relating to the ongoing management of the assets.
- Setting forth an investment structure and guideline for the allocation of assets.
- Establishing formulized criteria to measure, monitor, and evaluate performance result on the regular basis.
- Encouraging effective communication among both parties (manager & investor), including external parties engaged to execute investment strategies.
The policy applies to core funds of investment (“core funds” describe below) under the direction of the investing partners. The policy may extend according to the situation of the market, and according to the need of the investors.
Manage by the investors
Zohaib Rs. 10, 00,000
Mujtaba Muzaffer Rs. 10, 00,000
Mamoon Rs. 10, 00,000
Tazeem Rs. 10, 00,000
Total investment funds Rs. 40, 00,000
The policy does not allow the external parties to invest their fund in this program. Only these persons are allowed to extend and contract their funds in this program.
Investment Goals, Key Responsibilities, and Risks
The investment goals state the mission of the program and its investment program.
- The mission of the program is to maintain their position in the markets for long term purposes while they are also getting the short term benefits from the market.
- The overall investment goal for each of the core fund is to maximize the return within the reasonable level of risks, to ensure that each investment option consistently follows its guideline and its objectives.
- The next goal for investors is to maintain their position in the social sector by providing the indirect benefits.
- The investors are bond to fulfill the legal requirement of the markets set by the marketing authorities as well as by the government, and give surety that they are not involve in any kind of illegal activity.
- The investors charged with responsibilities for the management of program which includes the establishment of investment policies for the program and the oversight of the management of the program’s assets.
- The investment must utilize for earning reasonable return, which also helpful for the society.
- The commodity market risk is the risk that the investments returns of the program option do not meet the participant’s expectation. Responsibilities for determining the overall level of commodity market risk lies with the program participants.
- The active risk refers to the volatility of the difference between the return of the investment product and the return of its benchmark. Responsibilities for active risk are jointly shared by the manager and the investors.
- Total investment risk refers to the return of the product offered.
- Investor’s assets allocation risk the manager may provide the education of assets allocation to the investors, responsibility for determining the appropriate investment objectives and the selection of core funds to meet those objectives lies with the participants.
Following are the markets in which investors are invested their funds, because the investors are the risk adverse and they want to become the long term investors instead of getting the short term benefits from the markets. They have the knowledge about these markets. The markets are:
- Commodity market (% of the funds)
- Medicines (life saving drugs)
- Oil and gas
- Stock market (% of the funds)
- T – Bills
According to the nature of the investors, they are risk adverse; policies are set according this situation. The policies are:
- As mentioned above the investors want to invest some percentage of funds in the commodity market. Investors want to invest in medicine, oil and gas, pesticides, and the some percentage in the stock market. Investors want to invest in T-Bills, shares and securities.
- In medical sector, investors want to invest in those areas where the people are suffered with the common disease. By investing in medicines they can get reasonable return and also get the social position in these areas.
- The next aim to invest in the oil and gas sector, this sector has a great value for the investor as we are seeing in the current situation of the Pakistan as well as the whole world.
- The next option for investment which the investors select is the agriculture sector, where investors want to invest in pesticides, because it is a profit oriented sector in Pakistan.
- After all above some percentage should be invested in stock market, in T-Bills and the government securities.
- All above policies prepare by the investors with the help of fund manager. The percentages of funds are allocated according to the needs of the investors and the conditions of the markets. That will be changeable according to the circumstances of the markets.
The general guideline applies to the investment manager are:
- All decisions regarding sector and security selection, portfolio construction, and the timing of purchase and sale are delegated to the investment manager.
- The purchase of securities issued by tobacco is prohibited
- Transaction shall be executed at the lowest possible total cost, which includes commission, efficiency of execution, and market impact.
- The direct transaction made by the manager without informing the investor is prohibited.
- The manager must inform about the market condition and the opportunities of the market at the most recent time. Otherwise general meeting between manager and the investor must be held on weekly basis.
- The managers must evaluate the financial position of the company before making the investment decision.
- The manager and the investor will periodically review this policy and the investment guideline to determine if amendments are appropriate based on changed circumstances such as market environment, or the need of the program.
Note: All the rules and regulation imposed by the government are applicable.