Effective capital allocation involves distributing financial resources in a way that aligns the goals and objectives of an organization with its investment program. It can be difficult to determine if all the components of the investment process are working together in aligning strategy with the program’s goals.
We believe there is a framework that can help. The “Investment Golden Rule” combines the components of the capital allocation process with the return objective in order to improve investment decisions across the organization. In this paper we will analyze some practical examples of the capital allocation process through the lens of this framework.