What is an Investment Objective?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 21 August 2019
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An investment objective is a means of assisting an investor in reaching his or her ultimate investment goals. Strategies of this type may be aimed at helping the investor achieve a certain level of return within a short period of time, or be related to long-term goals, such as the accumulation of a certain amount of reserves in a retirement fund. Over time, an investment objective may change, or be achieved, leaving room for other objectives to be formulated and pursued.

It is not unusual for an investment objective to make use of asset allocation as a way of reaching some ultimate goal. For example, an investor may have the objective of adding a certain amount of resources to a retirement fund during a twelve-month period. In order to achieve this objective, he or she will buy and sell various stocks, bonds, and other financial instruments in a way that makes it possible to generate enough in return to deposit the desired amount of funds into the retirement account. Once the goal is met, the investment objective is considered achieved, and the investor can focus on creating new objectives for the following twelve-month period.


The investment objective may also focus on achieving some type of long-term goal, such as structuring a portfolio so it generates enough return annually to provide the investor with a comfortable standard of living. Over time, the investor will engage in portfolio management that seeks to identify the ideal combination of assets to generate that desired amount of annual income. Once the portfolio is arranged to provide this level of annual income, the investor will continually evaluate each holding to determine its ability to continue producing return over the course of the next year to five years. Depending on the outcome of those projections, the investor may occasionally buy or sell some asset as a means of preserving that desirable rate of annual return.

Both individual investors and the managers of various funds will set investment objectives, and take steps to reach those objectives. Depending on the scope of the operation, and the type of organization that is pursuing these objectives, there may be the need to file certain documents with a national government regulatory agency. For example, a Form ADV is a required form used in the United States. Firms engaged in investing activity must file this form with the Securities and Exchange Commission, a regulatory body that is operated by the federal government. Like its counterparts in other nations, the Form ADV includes all the data that is relevant to the regulating agency, such as the name and type of organization, and the number of employees associated with the organization. Forms of this type will also require information regarding the investment services offered to clients and any fees that are associated with those services.



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