The scientific advances provided by modern portfolio theory, together with the evolving prudent expert standard, virtually require that fiduciaries base their investment actions on a total portfolio approach. Although the legal establishment has been regrettably slow to provide leadership in this direction, investment managers and other fiduciaries must recognize and apply these theoretical advances, particularly in drafting investment policy statements and considering the asset classes to be included in a potential asset mix. No particular asset or strategy should be per se excluded from consideration.
A pension fiduciary shall discharge his duties with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man 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
“ arrangements under which products or services other than execution of securities transactions are obtained by an adviser from or through a broker-dealer in exchange for the direction by the adviser of client brokerage transactions to the broker-dealer”
The SEC requires investment advisers to disclose soft dollar arrangements to their clients