An investment policy describes the parameters for investing government funds and identifies the investment objectives, an entity’s risk tolerance, constraints on the investment portfolio, and how the investment program will be managed and monitored. The document also serves as a communication tool for the staff, elected officials, the public, rating agencies, bondholders, and any other stakeholders on investment guidelines and priorities.
An investment policy allows for quality decision making and demonstrates a commitment to the fiduciary care of public funds, making it the most important element in a public funds investment program. GFOA recommends that all governments establish a comprehensive written investment policy, which should be adopted by the governing body.
Here, we outline ten steps you can take to develop a comprehensive investment policy, as outlined in GFOA’s investment policy best practice.
- Publication date: October 2024