The rule evaluates investment decisions in the context of the entire portfolio and overall investment strategy rather than in isolation. Diversification is required absent special circumstances, and delegation to investment professionals is permitted.
Compliance is judged by conduct rather than outcome.
Alternative Names:
Prudent Investor Standard|Uniform Prudent Investor Act
Why it Matters?
Portfolio-level evaluation means a single losing investment does not establish breach, which shifts the analysis to whether the overall strategy and diversification were prudent, and documented investment policy statements are the primary defense evidence. Concentrated positions in a single security are the recurring exposure, since failure to diversify requires special circumstances the trustee must establish. Retained legacy holdings generate most of these claims.
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Frequently asked questions
Does a losing investment establish breach?
What generates most claims?
