Prudent Investor Act

See: Prudent Investor Rule.

"Fiduciary." Fun word. A fiduciary is like a trustee: someone you’re trusting with your trust...your treasure trove of assets. The Uniform Prudent Investor Act (UPIA) is a statute of guidelines for fiduciaries, adopted by the American Law Institute’s Third Restatement of the Law of Trusts in 1992. The Uniform Prudent Investor Act was an update to how fiduciaries should be investing trust assets. The old version was called the “Prudent Man Rule,” which is that fiduciaries should invest trust assets like a “prudent man,” as if they were their own assets.

Today’s in-crowd, reflected by the UPIA, believes that the prudent thing to do now is the modern portfolio theory (MPT) and total returns approach to investing. The UPIA supports actions like diversification and balanced, responsible investing. It encourages fiduciaries to always look at the whole, rather than the parts, when dealing with other people’s assets.

See: Modern Portfolio Theory.