An Economic Analysis of the Legal Concept of Trustees' Power of Investment

Stanford, J. D. (2001) An Economic Analysis of the Legal Concept of Trustees' Power of Investment Queensland, Australia: UQ School of Economics, Discussion Paper No. 296

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Author Stanford, J. D.
Title of report An Economic Analysis of the Legal Concept of Trustees' Power of Investment
Publication date 2001
ISBN 1446 5523
Publisher UQ School of Economics, Discussion Paper No. 296
Place of publication Queensland, Australia
Start page 1
End page 32
Total pages 32
Collection year 2001
Subjects 340203 Finance Economics
720299 Microeconomic issues not elsewhere classified
K
Abstract/Summary Authorised trustee status is a legal concept which has economic implications; one of the major implications is that it assists in the direction of investment funds into particular securities and areas of the economy. The concept of authorised trustee status, while attempting to achieve specific outcomes for the beneficiaries of trusts cannot be relied upon to secure these results. Economic analysis of the role of the trustee maintains that this role is one of portfolio manager; a role which is complex but which is explicable in terms of definable procedures and practices. The role of trustee as portfolio manager is one which requires greater financial knowledge than can be assumed is possessed by all trustees. The trustee as portfolio manager is required to maintain a review of decisions make under powers to invest trust assets. A solution to the problem of authorised trustee status is proposed. The solution takes two parts: the first is the adoption of the prudent person approach but with the codification of duties of the trustee and the explicit listing of the factors that a trustee should consider in using the investment powers. The second part of the proposed solution is to link the investment powers of trustees to the best practice features of securities advisers who are now licensed by a regulatory body, the Australian Securities and Investment Commission.
Keyword Trustees, Investment, Trust Law, Investment advice

Document type: Research Report
Collection: Discussion Papers (School of Economics)
 
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Created: Tue, 14 Aug 2007, 13:24:07 EST