How does investment strategy relate to investment policy?

Investment strategy is fundamentally grounded in the investment policy, serving as its practical application. The investment policy outlines the overall guidelines and objectives of an investor's plan, including their risk tolerance, investment goals, and time horizon. From these parameters, the investment strategy is developed to meet those objectives while adhering to the established guidelines of the investment policy.

By ensuring that the investment strategy is compliant with the investment policy, it allows for consistency and alignment in investment decisions. This compliance is crucial because it helps manage risk appropriately and ensures that investment choices are made with a clear understanding of the investor's long-term goals and constraints. The strategy will dictate specific tactics and asset allocations but must always remain within the framework set by the policy to be effective and responsible.

Other choices suggest ideas that are not in alignment with the principles of investment management, where a successful strategy should always be informed by the overarching policy instead of being independent or focused only on short-term outcomes.