prudent investor rule
prudent-investor rule. Trusts. The principle that a fiduciary must invest in only those securities or portfolios of securities that a reasonable person would buy. • The origin of the prudent-investor rule is Harvard College v. Amory, 26 Mass. 446 (1830). This case stressed two points for a trustee to consider when making investments: probable income and probable safety. The trustee must consider both when making investments. Originally termed the prudent-man rule, the Restatement (Third) of Trusts changed the term to prudent-investor rule. — Also termed prudent-person rule. [Cases: Trusts 217.3(5). C.J.S. Trover and Conversion § 496.]
