Prudent Man Rule
RS 11:263
§263. Prudent-man rule; investments
A) The prudent-man rule shall be applied by the systems, funds, and plans governed by this Subpart.
B) The prudent-man rule shall require each fiduciary of a retirement system and each board of trustees acting collectively on behalf of each system to act with the care, skill, prudence, and diligence under the circumstances prevailing that a prudent institutional investor acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.
C) This standard requires the exercise of reasonable care, skill, and caution, and is to be applied to investments not in isolation, but in the context of the trust portfolio, and as part of an overall investment strategy, which shall include an asset allocation study and plan for implementation thereof, incorporating risk and return objectives reasonably suitable to that trust.
D) Notwithstanding the prudent-man rule, no governing authority of any system or fund governed by this Subpart shall invest more than fifty-five percent of the total portfolio in equities, except as provided in Paragraph (2) of this Subsection or in R.S. 11:267.
E) The governing authority of any system to which R.S. 11:267(A) is inapplicable may invest more than fifty-five percent of the total portfolio in equities, so long as not more than sixty-five percent of the total portfolio is invested in equities and at least ten percent of the total equity portfolio is invested in one or more index funds which seek to replicate the performance of the chosen index or indices.
F) The prudent-man rule as used herein shall not prohibit investment in small and emerging businesses, small business investment companies, and venture capital firms as provided in R.S. 11:268 so long as such investment otherwise complies with the provisions of this Section.
G) Notwithstanding the prudent-man rule, a system board of trustees may but is not required to divest itself of any holding in a company having facilities or employees or both located in a prohibited nation as that term is defined in R.S. 11:312(B)(2).
Acts 1984, No. 867, §1; Acts 1987, No. 49, §1; Acts 1989, No. 216, §1; Acts 1990, No. 214, §1; Redesignated from R.S. 42:717 by Acts 1991, No. 74, §3, eff. June 25, 1991; Acts 1992, No. 1046, §§1 and 2, eff. July 1, 1993; Acts 1997, No. 1301, §1, eff. June 30, 1997; Acts 2003, No. 788, §1, eff. July 1, 2003; Acts 2004, No. 850, §1, eff. July 12, 2004; Acts 2005, No. 9, §1, eff. May 27, 2005.
NOTE: See Acts 2004, No. 850, §3, relative to phasing in of indexing and relative to deadline for compliance by La. Assessors' Retirement Fund.
RS 11:263
§263. Prudent-man rule; investments
A) The prudent-man rule shall be applied by the systems, funds, and plans governed by this Subpart.
B) The prudent-man rule shall require each fiduciary of a retirement system and each board of trustees acting collectively on behalf of each system to act with the care, skill, prudence, and diligence under the circumstances prevailing that a prudent institutional investor acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.
C) This standard requires the exercise of reasonable care, skill, and caution, and is to be applied to investments not in isolation, but in the context of the trust portfolio, and as part of an overall investment strategy, which shall include an asset allocation study and plan for implementation thereof, incorporating risk and return objectives reasonably suitable to that trust.
D) Notwithstanding the prudent-man rule, no governing authority of any system or fund governed by this Subpart shall invest more than fifty-five percent of the total portfolio in equities, except as provided in Paragraph (2) of this Subsection or in R.S. 11:267.
E) The governing authority of any system to which R.S. 11:267(A) is inapplicable may invest more than fifty-five percent of the total portfolio in equities, so long as not more than sixty-five percent of the total portfolio is invested in equities and at least ten percent of the total equity portfolio is invested in one or more index funds which seek to replicate the performance of the chosen index or indices.
F) The prudent-man rule as used herein shall not prohibit investment in small and emerging businesses, small business investment companies, and venture capital firms as provided in R.S. 11:268 so long as such investment otherwise complies with the provisions of this Section.
G) Notwithstanding the prudent-man rule, a system board of trustees may but is not required to divest itself of any holding in a company having facilities or employees or both located in a prohibited nation as that term is defined in R.S. 11:312(B)(2).
Acts 1984, No. 867, §1; Acts 1987, No. 49, §1; Acts 1989, No. 216, §1; Acts 1990, No. 214, §1; Redesignated from R.S. 42:717 by Acts 1991, No. 74, §3, eff. June 25, 1991; Acts 1992, No. 1046, §§1 and 2, eff. July 1, 1993; Acts 1997, No. 1301, §1, eff. June 30, 1997; Acts 2003, No. 788, §1, eff. July 1, 2003; Acts 2004, No. 850, §1, eff. July 12, 2004; Acts 2005, No. 9, §1, eff. May 27, 2005.
NOTE: See Acts 2004, No. 850, §3, relative to phasing in of indexing and relative to deadline for compliance by La. Assessors' Retirement Fund.