18. The SWF’s investment policy should be clear and consistent with its defined objectives, risk tolerance, and investment strategy, as set by the owner or the governing body(ies), and be based on sound portfolio management principles.
18.1. The investment policy should guide the SWF’s financial risk exposures and the possible use of leverage.
18.2. The investment policy should address the extent to which internal and/or external investment managers are used, the range of their activities and authority, and the process by which they are selected and their performance monitored.
18.3. A description of the investment policy of the SWF should be publicly disclosed.
The Law, Chapter IV, Article 7, describes the general Investments Directives of the FAP.
The Investment Directives establishes the investment policy of the FAP’s assets and sets forth risk tolerance limits through benchmarks and corresponding tracking error.
The FAP’s Investment policies and standards establish the principles, parameters, and directives for the administration and management of the Fund, which at the same time, regulates the strategies in strict compliance of the Trustee, the custodian and the asset manager, as well as to follow the Santiago Principles.
Also in section 15 of the Investment Policies and Standards, risk management is based mainly on the use of tracking error for each portfolio manager, asset class, and corresponding benchmark. Other methods may be used, such as Montecarlo simulation, Sharpe ratio, Treynor index, information ratio, beta, convexity, etc.
A description of the investment policies and Directives can be found on our website at: www.fondoahorropanama.com