Creating an Investment Policy Statement for a Sporting Club Portfolio

This report presents an Investment Policy Statement (IPS) tailored for a sporting club, addressing the allocation of a $250,000 portfolio across equity, debt (bonds), and cash. The IPS outlines the club's investment objectives, including a required annual return of 11% to maintain its expenditure and capital value, considering a 3% inflation rate and an 8% expenditure requirement. The risk tolerance is assessed as average, given the mix of investments and the club's reliance on cash flow. Liquidity needs are deemed high due to operational requirements. The recommended portfolio allocation includes 60% in equity (Woolworths, Wesfarmers, ANZ Bank, BHP Billiton), 30% in bonds, and 10% in cash. The rationale for each allocation is provided, emphasizing the potential for higher returns from equity, stable income from bonds, and liquidity from cash. The report analyzes the performance of the selected equity investments over a six-month period, calculating an average return of 15.75%. The bond return is estimated at 10.22%. The report concludes by summarizing the investment strategy and its expected outcomes.