Lessons
- CFA Level 2: Ethic & Professional Standards – Introduction
- The Code of Ethics – Short Version of the Six Components
- The Seven Standards for Professional Conduct
- CFA Soft Dollar Standards - Overview
- CFA Soft Dollar Standards
- Research Objectivity Standards (ROS)
- CFA Level II Ethics – Exam Thinking and Recommendations
- The Prudent Investor Rule
The Prudent Investor Rule
The old Prudent Man Rule – rules governing trustee behavior for managing the assets of a trust, stemmed from an 1830 court ruling in the US and has been replaced by the new Prudent Investor Rule.
Basic Principles
The basic principles of the Prudent Investor Rule are:
- Diversification is critical to minimizing risk.
- A trust’s tolerance for risk must be determined.
- Trustees can only incur reasonable transaction expenses for management of trust assets.
- The trustee is bound by a fiduciary duty of impartiality to balance the income needs of current income beneficiaries with the long term growth needs of future income beneficiaries.
- Trustees can delegate responsibilities to experts for specialties in which they lack sufficient knowledge.
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