INVESTMENT POLICY STATEMENT: MR. PEDRO ALVES

The Investment Policy Statement (IPS) for Pedro a 28-year-old individual investor, has the details of a strategic financial plan aimed at reaching a target inflation-adjusted portfolio value over €1,000,000 by 2035. The IPS seeks to produce a nominal annual return of 11.15% while keeping an annual risk for the client to bear in the acceptable range of 10% to 15% given that the investor has a moderate/balanced risk profile and no urgent cash needs. Using blue-chip and value stocks in addition to ETFs and commodities, the investment strategy promotes an allocation for the three of them. Targeting high-performing industries like finance, energy, and utilities, the strategic asset allocation demonstrates a diversified strategy. Risk is reduced by regular rebalancing and strict adherence to specified asset class limitations. To maximize returns while meeting the client's goals, the portfolio design integrates thorough financial analysis, including important indicators like p/e ratios, p/b, and volatility assessments. The strategy's use of Historical Value at Risk (VaR) analysis ensures that portfolio exposure stays within reasonable limitations, making risk management a key component. Historical VaR and Return at Risk (RaR) studies were performed to evaluate downside exposure. The predicted monthly loss of the portfolio, at a 95% confidence level, is less than 4.94%, or roughly €19,740, which is still within the investor's maximum allowable loss. The portfolio's appropriateness for a moderately profile is further supported by these findings. In addition, a MonteCarlo Var analysis will be discussed in the Risk Analysis section. Pedros's financial objectives are perfectly aligned with the IPS because it emphasizes diversification, risk mitigation, and balanced long-term growth, resulting in a strong and resilient portfolio that can handle market volatility and produce the intended results.