Archive for January 2023
UPIA §9 re Prudent Delegation of Investment Duties
Many trustees implicitly trust the investment manager to whom investment duties have been delegated. They trust that the manager’s strategy is reasonable. They trust that the return the manager produced was appropriate given the level of risk that was taken. They trust that the manager’s representation of being “above average” is supported by facts. This…
Read MoreInvestment Governance Best Practices for Business Managers (How to Watch the Hen House)
The Problem: You are a business manager(1), and it is either explicitly or implicitly the case that you are responsible for monitoring the activities of the investment managers that have been entrusted with your clients’ capital. (If you are not a business manager or disagree with this statement, stop reading. This paper does not apply…
Read MoreA Trustee’s Duty to Independently Monitor Delegates UPIA §9(a)(3)
The Uniform Prudent Investor Act at Section 9(a)(3) directs, “A trustee shall exercise reasonable care, skill and caution by periodically reviewing the agent’s actions in order to monitor the agent’s performance and compliance with the terms of the delegation.” Many trustees implicitly trust the investment advisor to whom they (or their predecessor) delegated investment duties. They…
Read MoreDuty to Prudently Administer or “Check, check, double check, recheck” (1 of 12)
Duty of Prudence: Section 2(a) of the Uniform Prudent Investor Act directs, “A trustee shall administer the trust as a prudent person would…” But how is one to know how a prudent trustee would act?
Read MoreInvestment Advisor Annual Review (Duty to Monitor)
A trustee has a duty to act prudently when they delegate investment responsibilities to third parties.
Read MoreA Trustee’s Duty to Monitor Investment Agents
Duty to Monitor Investment Agents: Section 9(a)(2,3) of the UPIA directs that a trustee shall establish “… the scope and terms of the delegation, consistent with the purposes and terms of the trust [and] periodically reviewing the agent’s overall performance and compliance with the terms of the delegation.” In response to this duty a prudent…
Read MoreERISA 1104(a)(1)(B) re Duty to Prudently Delegate
A trustee has a duty to prudently invest the plan assets on behalf of the beneficiaries. However, few trustees actually take on this complex responsibility alone. In most cases the trustee will…
Read MoreTrust But Verify: Do Private Equity and Hedge Funds Deliver Superior Risk-adjusted Returns?
For several decades, the investment industry has promoted the virtues of hedge funds and private equity funds for large instructional investors and ultra high net worth individuals. But over the last few years these products have come under increased scrutiny because the hoped-for benefits have, for the most part, not materialized. A report in April…
Read MoreA Business Manager’s Duty to Monitor the Risk and Return of their Clients’ Investment Portfolios
The Problem: You are a business manager and it is either explicitly or implicitly the case that you are responsible for monitoring the activities of the investment managers that have been entrusted with your clients’ capital. (If you are not a business manager or disagree with this statement, stop reading. This paper does not apply…
Read MoreDuty to incur reasonable investment costs
Duty to Pay Only Fair Fees: Section 7 of the UPIA directs, “In investing and managing trust assets, a trustee may only incur costs that are appropriate and reasonable in relation to the assets, the purposes of the trust, and the skills of the trustee.” It is fundamental to a trustee’s duties to ensure that expenses incurred…
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