Investment Policy Statement: Marco Rossi

The Investment Policy Statement (IPS) serves as a crucial communication tool between the advisor and the client, clearly delineating the advisor's responsibilities. These responsibilities encompass establishing the IPS, delivering progress reports, managing asset allocation, mitigating risks, and ensuring compliance with CFA rules. The client has a moderately conservative risk tolerance, emphasizing capital preservation with limited risk-taking. The client has specific restrictions, prohibiting the use of leverage, short selling, and investments in non-regulated assets such as cryptocurrencies. Additionally, the client has no specific liquidity needs. The main investment goal is to grow the initial capital of €50,000 to €95,000 over a 15-year horizon. Adjusting for inflation, the target amount is €129,750.7, requiring a minimum annualized return of 6.45%. The investment philosophy is structured using Value Investing and market timing, primarily with Exchange-Traded Funds (ETFs). Various security selection rules have also been adopted to align with this philosophy. To manage the portfolio effectively, the expected return and volatility were computed using Mean-Variance Theory (MVT) to maximize the Sharpe Ratio. This resulted in an average annualized return of 11.046% and an average annualized volatility of 8%. Lastly a risk analysis was performed, employing Value-at-Risk (VaR) and Expected Shortfall to assess potential 15-year horizon risks.