Investment policy statement monitoring with seven agents that check every limit daily, cite each exception to its clause and its holdings, and leave every decision to your people
Every policy limit checked daily, and every exception tied to its clause and its holdings.
See one case, screen by screen ↓Investment Policy Statement Monitoring is investment policy statement software for pension funds, endowments, foundations and OCIOs. It checks every portfolio and manager against the investment policy statement every business day, style drift included. Seven AI agents read the policy and every manager guideline into cited rules, check allocations and guideline limits against custodian holdings, measure style drift from holdings and draft the quarterly compliance certificate. The investment officer decides each exception, the CIO approves and signs, and the committee chair countersigns.
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A pension fund, endowment or foundation runs its money under an investment policy statement. The IPS sets the asset allocation policy ranges, the liquidity floor, the prohibited holdings, the limits in every manager's guidelines and the criteria that put a manager on the watch list. For an ERISA plan, fiduciaries must follow the plan's governing documents, and the Department of Labor has long treated the IPS as one of them: the managers the plan appoints must follow it unless doing so would be imprudent. Yet most investment offices test it once a quarter: an investment officer re-keys the ranges and guideline limits into a spreadsheet and ticks them off against the custodian file and the general consultant's report, which lands weeks after quarter end.
Between reports, things move. A fall in public markets pushes private equity over its ceiling without a single new commitment — the denominator effect — and nobody can say quickly whether the IPS requires a sale. A small-cap value manager drifts into mid-cap growth while returns stay ahead, so returns-based style analysis misses it for quarters. A guideline amendment arrives and never becomes a coded rule. The SEC's Rule 38a-1 adopting release lists style drift among the portfolio-management risks a fund compliance program should address, yet the check still waits for the quarter. And the CIO signs a quarterly compliance memo whose numbers cannot be traced back to a holding.
Estimated split for one investment officer's quarterly policy check across about 60 mandates, by hand and with the solution.
Seven agents read the policy, check every band and manager daily and draft the certificate; the CIO signs.
Ridgeline County Employees' Retirement System runs $24.71 billion across three plans and 58 managers. It is Friday, October 16, 2026, holdings are as of Thursday's close, and the Q3 board packet closes next Thursday. Here is the day, screen by screen, in the working solution.
Daniel's home screen is a short conversation from the agents. The Holdings agent loaded 14,286 positions across 58 mandates and reconciled them to the custodian's $24.71B to the dollar; one feed is late, so private equity uses June 30 values rolled forward for calls and distributions. The Allocation agent, the Style agent, the Policy agent and the Certificate agent each report in one paragraph, with a citation on every figure and a button to act on it. Beside it: 2 exceptions, 4 notices and what needs him first, by time left.
Allocation agent: “Private equity is 13.4% of the Pension Trust, above the 12% ceiling in IPS §4.2, for the 45th day. It is passive… §4.4 does not require a sale. I have a pacing plan ready for you.”
Policy corridors show each of the nine asset classes in IPS §4.2 as a band from its minimum to its maximum, with the target, today's allocation as a dot and a twelve-month trail behind it. Private equity sits outside its 8–12% corridor at 13.4% ($3.15B). US equity, at 23.4%, is near its 22% floor and has a notice. On the right, every exception and notice carries its clause: the Brightwater style limits under IMA Schedule B §3.1 and §3.2, a German side letter's loan-to-value limit, a high-yield manager's CCC bucket.
Private equity first crossed 12% on Monday, August 31, at 12.1%. Staff made no new commitments this quarter; in September private equity rose 0.6% while US equity fell 8.1% and non-US equity 7.4%. So the breach is passive — the denominator effect — and the evidence pane opens IPS §4.4 with the clause highlighted: the CIO reports to the committee at its next meeting and presents a plan to be back in range within 24 months.
IPS §4.4.2: “Where such an allocation exceeds its range because of changes in the value of other assets, Staff is not required to sell interests.”
The private equity value rests on 96 fund statements; 25 are not in English — German 11, French 8, Japanese 4, Spanish 2. Adlerhorst Buyout Fonds IV's capital account statement shows its NAV of EUR 48,612,000 in German beside the English. The Evidence agent recomputed 13.41% from the custodian file and all 96 statements, and caught one fund still on its March statement before Daniel saw it. Then the Allocation agent offers three cures: pace 2027 commitments from $900M to $550M and be back in range by Q2 2028 with no sale; sell about $330M on the secondary market at an estimated cost of $26–40M; or ask the committee to widen the range to 14% until the March 2027 review, which needs a Board vote.
Option B is marked “Not recommended”: “Not required by §4.4.”
Priya, who owns private equity pacing, tries $600M of 2027 commitments: the projection moves to Q3 2028 and the agent warns that it is outside the 24 months IPS §4.4.2 allows and will be flagged to the CIO. The plan stays at $550M. Daniel approves option A with the reason code “Passive breach — cured under IPS §4.4” and it goes to Elena Marsh, the CIO, for the second approval.
“Option A · 2027 commitments $550M · back in range Q2 2028. Elena Marsh approves next.”
Brightwater Small Cap Value was hired in March 2019 for small-cap value. At the September 30 quarter end its weighted median market cap was $14.2B against a $6.0B limit, only 61.7% of the portfolio was in companies under $10B at purchase against an 80% minimum, and turnover had risen from 28% to 61%. Five quarter ends trace the path from $3.1B to $14.2B. The Style agent splits the move — 74% the manager's trades, 26% prices — names the purchases behind it, starting with Corvane Semiconductor at $22.6B. The drift view lines the move up with the April 10 change of lead portfolio manager.
Evidence agent: “Returns are ahead of the benchmark, +9.8% against +2.1% over one year, so this is not a performance case: the Trust is simply not getting the small-cap value exposure it hired.”
The drift hits two watch-list triggers in IPS Appendix C: C.2, style, and C.3, people. The Manager watch agent recommends placing Brightwater on watch, sending an inquiry letter and having Harborline Consulting review the mandate at the October 29 committee meeting. The letter to Cole Brandt cites Schedule B §3.1 and §3.2 and asks for a plan to return within the limits within 90 days. Daniel can ask for a shorter version; either way it goes to the CIO before it is sent.
The Manager watch agent never sends a letter, and never puts a manager on watch, without the CIO's approval.
Quillfield Capital sent Guidelines Amendment No. 3 for its $1.94B Core Plus mandate. The Policy agent shows the amendment beside the rules it proposes: below-investment-grade securities up to 20% (was 15%), a new 10% emerging-market debt limit, duration unchanged. One clause it will not guess at: “substantially hedged” is not defined, so it asks Daniel whether to use at least 90%, at least 95%, or ask the manager. The rules go live only after the CIO activates them.
Policy agent: “The Trust's other core-plus mandate uses a hedge ratio of at least 90%. Which should I use?”
The Certificate agent drafted the Q3 2026 Investment Policy Compliance Certificate at 06:52: 412 rules, 26,368 checks on 14,286 positions, 11 exceptions with 9 resolved and 2 open, liquidity at 14.2 months of net benefit payments against a 6-month floor. The Evidence agent verified 47 of 47 citations. Daniel marks it reviewed; Elena signs with an attestation and her authenticator code. Daniel cannot sign for her.
“I have reviewed the certificate and its two exceptions, and certify it under IPS §8.2.”
Signed by the CIO, the certificate goes to Margaret. Before she countersigns she asks it, in plain words, why they didn't sell private equity, and gets a cited answer: the breach came from the fall in public markets, §4.4.2 does not require a sale, and selling $330M would have cost an estimated $26–40M. Then she countersigns.
Certificate agent: “Because the policy does not require it and selling would have cost money.”
The same quarter, seen by five of the people who carry it — what an IPS review looked like, and what it looks like now.
Seven agents read the policy, check every band and manager daily and draft the certificate; the CIO signs.
Reads the investment policy statement, manager guidelines, amendments and side letters, in the language they are written in, into rules cited to their clauses — ranges, prohibitions, liquidity floors, manager limits and watch-list triggers. Compares each new version with the live rules and marks what changed.
Loads custodian holdings each morning, performance returns and private fund statements in their own language, reconciles totals to the custodian and flags late or stale data.
Checks every plan against its bands each business day, classifies breaches as active or passive, and projects cures the policy allows from known cash flows — benefit payments, capital calls and distributions.
Measures each equity manager's style from holdings — weighted median market cap and value–growth score — splits drift into the manager's trades and price moves, names the holdings behind it and cross-checks against returns-based style.
Evaluates the IPS watch-list criteria — performance, style, people, organization, regulatory and uncured breaches — from returns, manager letters, filings such as Form ADV updates, and news, and drafts inquiry letters to managers.
Recomputes every figure from source and verifies every citation before a person or the certificate sees it — 1,284 figures on the sample day, with 3 disagreements escalated.
Drafts the quarterly compliance certificate with every sentence cited — statements, open exceptions with their cures, the resolved history — and answers the committee chair's questions with citations.
Decide, approve and sign, countersign. The agents propose; a named person decides.
Every screen has an ask bar — Today, the corridors, each exception, the drift view, managers, policies, the certificate, the audit trail and settings. Answers cite the policy, the holdings and the statements they came from; the agents act only when you say, and an instruction is logged like any other action.
Do we have to sell private equity?
No. The breach is passive, so IPS §4.4.2 says Staff is not required to sell. Elena must report it to the committee on October 29 and present a plan to return within range within 24 months. Selling $330M on the secondary market would cost an estimated $26–40M.
Would returns-based analysis have caught this?
Later. A 36-month returns regression still put Brightwater in small blend at June 30, because two years of small-value history dominate the window. The holdings showed mid-cap growth at June 30 already, at a weighted median market cap of $8.7B.
Brightwater is beating its benchmark, so why act?
Because the Trust hired it for small-cap value exposure, and the guidelines set limits on that exposure. Returns are ahead (+9.8% against +2.1%), but small-cap value is now about 0.9% of the Trust against the 2.5% intended, and the drift came with a new lead portfolio manager. The watch list asks the question; it does not fire the manager.
Request the missing Q3 attestations
Done. I sent the Q3 attestation request to the 7 managers who have not replied, with a reply-by date of Friday, October 23. Each request is on the audit trail.
13 screens from the working solution, on its sample data. Pick one to see it large.
What counts as a notice, a breach or a drift, and how fast each must be decided, are settings. The administrator proposes a change, the CIO approves it and nothing changes until then; every change is a new version on the audit trail.
| Setting | Default | Choose from |
|---|---|---|
| Early-warning margin | 1.5 points (0.5 for ranges narrower than 8 points) | 0.5 to 5 points, in half-point steps |
| Agent confidence threshold | 0.90 | 0.70 to 0.99; below it a person decides |
| Style drift counts after | 1 quarter end | 1 quarter end · 2 quarter ends |
| Private markets above range | IPS §4.4 — no forced sale, 24-month plan | IPS §4.4 — no forced sale, 24-month plan · Treat like public markets |
| Active breach | Decision within 1 business day | Decision within 1 business day · decision the same business day |
| Passive breach | Cure plan within 60 days of the breach | Cure plan within 60 days · within 30 days of the breach |
| Style exception | Decision within 15 business days | Decision within 15 business days · within 10 business days |
| Missed SLA | Escalate to the CIO, then the committee chair after 5 more days | Committee chair after 5 more days · after 3 more days |
Every figure is labelled: a target the solution is built to, an estimate, a typical published result, or a proven one.
“demo” = seen in the working solution, on its sample data · “target” = the design goal, measured in the live solution · “estimated” = our estimate ($330M × an 8–12% secondary discount; the days split). Sources: ERISA §404(a)(1)(D) and the Department of Labor's Interpretive Bulletins 94-2 and 2016-01, on an ERISA plan's investment policy statement as a document its managers must follow (IB 2016-01 was removed from the CFR in 2020; the duty in §404(a)(1)(D) is unchanged); the SEC's Rule 38a-1 adopting release (IA-2204, 2003) on style drift as a compliance risk. Ridgeline County Employees' Retirement System, Quillfield Capital, Harborline Consulting and the people, managers, funds, issuers and indexes named on this page are fictional — characters and sample data in the working solution.
Investment Policy Statement Monitoring is investment policy statement software for pension funds, endowments, foundations and OCIOs. It checks every portfolio and manager against the investment policy statement every business day, style drift included. Seven AI agents read the policy and every manager guideline into cited rules, check allocations and guideline limits against custodian holdings, measure style drift from holdings and draft the quarterly compliance certificate. The investment officer decides each exception, the CIO approves and signs, and the committee chair countersigns.
Each morning the Holdings agent loads custodian holdings and private fund statements, and the Allocation, Style and Manager watch agents check every rule against them — 412 rules on 14,286 positions in the sample, finished before 7 a.m. The Evidence agent recomputes every figure first. Exceptions and notices reach the investment officer the day they start, each tied to its clause, so investment compliance monitoring runs daily instead of once a quarter.
When public markets fall, a private equity allocation can rise above its range without a single new commitment: that is the denominator effect. The Allocation agent proves whether a breach is passive like this or active, and cites what the IPS allows. In the sample, the policy requires no sale and a plan to be back in range within 24 months, so the agent proposes pacing 2027 commitments and models it against a secondary sale. A person approves the cure; the agents never trade or commit.
Style drift is a manager moving away from the style it was hired for. The Style agent measures it from holdings, not only returns: each equity manager's weighted median market cap and value–growth score at every quarter end. It splits the drift into the manager's trades and price moves, names the holdings behind it and checks it against returns-based style. In the sample, the holdings had already moved to mid-cap at June 30, when a 36-month returns regression still put the manager in small blend.
Yes. The Manager watch agent evaluates each watch-list criterion in the IPS — performance, style, people, organization, regulatory and uncured breaches — from returns, manager letters, filings such as Form ADV updates, and news, and drafts inquiry letters. It never places a manager on watch or sends a letter without the CIO's approval.
The sample IPS has the investment committee review it at least once a year, at its March meeting, and lists triggers for an investment policy statement review in between, such as an asset class outside its range for more than ninety days. The solution checks those triggers every day: the private equity variance reaches its 90-day trigger on November 29, and the certificate says so. Between reviews, the Policy agent reads each amendment, guideline and side letter in the language it is written in, shows the original beside the English and compares it with the live rules. It asks when wording is unclear, and a rule goes live only after the CIO activates it.
Yes. The agents propose and explain; the investment officer approves, edits or rejects with a reason code, and the CIO approves cures, letters, watch-list changes and rule changes. The person who proposes cannot approve, the CIO signs the certificate and the committee chair countersigns, and every step is on a hash-chained audit trail.
The Agentic Solution Engine builds and deploys it from your requirements and documents — your investment policy statement, manager guidelines, side letters and a quarter of custodian holdings — and it goes live once every quality gate has passed. We will walk you through it on your own IPS first.
A cited yes, no or how-much for every fund, in under a minute, before the order.
1-min demoModel Portfolio RebalancingEvery model change reaches every account the same day, within each client's own rules.
1-min demoPerformance Attribution AnalysisWhy a portfolio lagged, answered the same day, each sentence tied to its attribution cell.
1-min demoWe'll run Investment Policy Statement Monitoring on your own investment policy statement, manager guidelines and a quarter of custodian holdings.