Investment Policy Statement (IPS) Builder for Corporates

# SKILL.md — Investment Policy Statement (IPS) Builder for Corporates

## Role
You are a corporate treasurer. Draft a comprehensive Investment Policy Statement for management and board approval governing the investment of corporate cash balances.

## Instructions

### Step 1: Collect Company Profile
Ask for:
- Company size (revenue), industry, cash balance typically held
- Investment objectives: capital preservation, liquidity, or yield
- Regulatory environment (bank? broker-dealer? insurance company? special rules apply?)
- Risk tolerance: conservative / moderate / balanced
- Typical cash needs: How much needs to be available within 1 week? 1 month? 12 months?

### Step 2: Investment Policy Statement Structure

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**CORPORATE INVESTMENT POLICY STATEMENT**
**Company:** [Name] | **Adopted:** [date] | **Reviewed:** [date]
**Approved by:** Board of Directors / Audit Committee

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**1. PURPOSE AND SCOPE**
This Investment Policy Statement establishes the investment guidelines for [Company]'s cash and short-term investment portfolio. It applies to all corporate cash balances except those held in dedicated benefit plans or pension funds.

**2. INVESTMENT OBJECTIVES**
Listed in priority order:
1. **Safety**: Preservation of principal — no undue credit or market risk
2. **Liquidity**: Maintain sufficient liquid assets to meet operating needs
3. **Return**: Maximize yield within the constraints of safety and liquidity

**3. AUTHORIZED INVESTMENTS**
| Investment Type | Maximum % | Minimum Rating | Max Maturity |
|---------------|---------|---------------|-------------|
| US Treasury Securities | 100% | N/A | 2 years |
| US Agency Securities (GSE) | 80% | AAA | 2 years |
| FDIC-insured bank deposits | 100% (per bank: $250K) | | N/A |
| US Government Money Market Funds | 100% | AAAm | N/A |
| Certificates of Deposit | 30% | A-/A3 or better issuer | 1 year |
| Commercial Paper | 25% | A-1/P-1 | 270 days |
| Corporate Bonds | 20% | A-/A3 or better | 2 years |
| Municipal Securities | 15% | AA-/Aa3 or better | 2 years |

**Prohibited Investments:**
- Equity securities
- Derivatives and structured products
- Speculative grade securities (below BBB-/Baa3)
- Foreign currency–denominated securities (unless approved by CFO)
- Leveraged instruments of any kind

**4. DIVERSIFICATION AND CONCENTRATION LIMITS**
- No single issuer (excluding US Government): > 10% of total portfolio
- No single maturity bucket: > 40% of portfolio in any 30-day window
- Operating reserve (30-day liquidity): Held only in MMFs, T-Bills, or FDIC deposits

**5. MATURITY AND DURATION GUIDELINES**
- Maximum maturity of any single security: 2 years
- Maximum weighted average maturity of portfolio: 12 months
- Operating funds (needed within 90 days): Invested only in instruments with maturity ≤ 90 days

**6. GOVERNANCE AND REPORTING**
- **Authorized traders**: CFO and Treasurer (dual authorization for transactions > $[X]M)
- **Custodian**: Securities held with [approved custodian bank]
- **Reporting**: Monthly report to CFO; quarterly report to Audit Committee
  - Monthly report includes: portfolio holdings, market values, income, compliance certification
- **Policy Review**: Annual review by CFO; Board reaffirmation every 3 years or after material change

**7. PERFORMANCE BENCHMARKS**
- Portfolio return compared to: [3-month T-bill rate / iMoneyNet Government MMF average]
- Return should be measured net of fees on a risk-adjusted basis

**8. COMPLIANCE CERTIFICATION**
The Treasurer certifies quarterly that the portfolio is in compliance with this policy. Exceptions require CFO approval and must be reported to the Audit Committee within 30 days.

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