Assignment No.

INVESTMENT POLICY STATEMENT

Prepared for:

Shakila Yasmin
Associate Professor
Course Instructor: PM and Investment Analysis (F-605)

Prepared by:
Md. Mahmudul Hasan
ID: ZR1802023
EMBA (Batch: 31)

IBA, Dhaka University

July 13, 2019
This Investment Policy Statement (“IPS”) is intended to assist the Investor (“Plan Sponsor”) for
selecting and monitoring the investment decision by establishing guidelines for making
investment-related decisions in a prudent manner. It outlines the underlying philosophies and
processes for the selection, evaluation, monitoring, and, if necessary, replacement of the
investment. The purpose of this investment policy statement is to establish guidelines for the
investor’s investment portfolio.

This IPS is not a contract and its guidelines are intended to provide a robust framework for
making fiduciary investment decisions in a prudent manner. Thus, the guidelines included in this
IPS should not be viewed as rigid, binding restrictions requiring blind adherence in all
circumstances. This IPS will be reviewed periodically and, if necessary, may be amended to
reflect changes.

General Information

Name : Mr. Nazmul Hasan

Age : 35
Type : Individual Investor, Taxable
City : Dhaka, Bangladesh
Health : Good
Source of income : Private Job
Level of career : Mid-Level
No. of dependence in family : Parents, Wife and Children
Net Worth: : BDT 4 m
Asset Covered by IPS: : BDT 1m

Investor’s Objective

- To maximize investment returns within reasonable and prudent levels of risk.

- Provide school tuition fees to children after 5 years

- Accumulate with sufficient asset to start a business after 10 years

Time Horizon

The investment guidelines are based upon an investment horizon of twenty years. Similarly, the
Fund's strategic asset allocation is based on this long-term perspective. Short-term liquidity is
expected but to keep minimum. The projected outlook for the Investors' financial situation:

- Modestly negative over the next two-year period

- Modestly positive over the next five years
- Very positive over the next thirteen years

2
Risk Tolerance
The investor recognizes the difficulty of achieving the investment objectives in light of the
uncertainties and complexities of contemporary investment markets. He recognizes that some
risk must be assumed if they are to attempt to achieve the long-term investment objectives.

In establishing the risk tolerances of the Investment Policy Statement, the ability, to withstand
short and intermediate term variability were considered. But, the Investor can tolerate infrequent,
very limited declines (less than 5%) through difficult phases in a stock market cycle. The risk
tolerance class can be defined as “Conservative”.

Tax Policy

The following are tax issues that should be considered in the management of this Portfolio:
- Investor wishes that this portfolio should be managed to minimize taxes
- The advisor needs to ensure tax rebate requirement of the investor while maintaining
the portfolio

Expected Return
In general, the investor would like the assets to earn at least a targeted of 11%. The objective is
to earn a long-term rate of return at least 8% greater than the inflation rate.

Investment Constraints

The investor is not willing to invest any company hazardous to environment like tobacco or
company doesn’t have proper waste disposal system.

Withdrawal policy

Capital values fluctuate, especially so over shorter periods of time. The Investor recognizes that
the possibility of capital loss does exist. But, the investor is not allowed to withdraw before 3
years.
The investor is allowed to withdraw only 40% of principal investments before twenty years with
a three month notice period because it is required to ensure the cash flow expectation of the
investor. The investor will have further right to withdraw if the advisor fails to meet performance
standard even after rebalancing asset and readjusting the IPS.

3
Asset Allocation

The investor understands that the fund's risk and liquidity posture are, in large part, a function of
asset class mix. The client has reviewed the long-term performance characteristics of various
asset classes, focusing on balancing the risks and rewards of market behavior. The following
asset classes were selected:
- Highly liquid securities
- Intermediate bond
- Mutual fund
- Go
- Real state

Rebalance Asset Allocation

The percentage allocation to each asset class may vary depending upon market conditions. The
allocation of the Fund will be reviewed at least quarterly and rebalanced as appropriate.
Financial reports should indicate when the portfolio is out of balance.

Annually the advisor will review the IPS, including the asset allocation ranges.

Remuneration of the advisor

The fee and remuneration of the advisor set forth by this IPS is 5% of the return from the
portfolio.

Investment Policy Review

The advisor will review this IPS periodically to determine whether stated investment objectives
are still relevant or whether changes to the IPS may be warranted. It is not expected, however,
that the IPS will change frequently. In particular, short-term changes in the financial markets
should not require adjustments to the IPS. This IPS shall remain in effect until revised or
amended by the advisor and investment.

Investor Md. Nazmul Hasan

Signature
Date 13th July 2019
Advisor Md. Mahmudul Hasan
Signature
Date 13th July 2019