Since 1992, when the prudent investor rule was adopted in the Restatement (Third) of Trusts, trust investing largely has been a balancing exercise—not just between portfolio risk and return, but also between the interests of the current and remainder beneficiaries.1
In part, the requirement that the standard of due care be applied holistically to the portfolio implies that a trustee cannot base investment decisions exclusively on current portfolio yield. Indeed, many states, including New York, require that the trustee consider the expected total return of the portfolio (among other factors) in arriving at an appropriate asset allocation.2
