Fiduciary prudence is the primary guidepost for institutional investing. IFA-I enables investment committee members to uphold and fulfill their duty with pride and confidence.
IFA-I invests all assets in strict adherence to the Prudent Investor Rule.
Five basic principles (the bold phrases are taken from Restatement of the Law Third, Trusts: Prudent Investor Rule, 1992):
* Sound diversification is fundamental to risk management and is, therefore, ordinarily required of trustees. Diversification is a basic tenet of risk management. Otherwise, portfolios would tend to be more volatile while having similar long-term expected returns.
Risk and return are so directly related that trustees have a duty to analyze and make conscious decisions concerning the levels of risk appropriate to the purposes, distribution requirements, and other circumstances of the trusts they administer. It is prudent to avoid uncompensated or unsystematic risk when possible. Investment risk should be taken on only when it is judged likely to contribute to desirable investment performance for the portfolio as a whole. The level and nature of investment risk should be consistent with the trust’s need, desire, and ability to tolerate that risk.
Trustees have a duty to avoid fees, transaction costs and other expenses that are not justified by needs and realistic objectives of the trust’s investment program.
The fiduciary duty of impartiality requires a balancing of the elements of return between production of income and the protection of purchasing power. This confirms that a strategy which endeavors to generate current income while preserving principal is likely to result in a reduction of real income due to inflation. It is often prudent to invest both for income and for capital appreciation, even if it means income alone is inadequate to meet cash flow needs.
Trustees may have a duty as well as having the authority to delegate as prudent investors would. Trustees should exercise due care in selecting investments, concentrating on the most relevant predictors of future performance: fees, diversification and asset class focus.
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Past performance does not guarantee future results.
WARNING: Past performance does not guarantee future
results. Investment returns and principal value will fluctuate,
so that investors' shares, when sold, may be worth more or less
than their original cost. Investing in any mutual fund, index or
actively managed, does not guarantee that an investor will make
money, avoid losing capital, or indicate that the investment is
risk-free. Actively managed funds sometimes outperform index funds.
You just don't know in advance which actively managed fund will
outperform the appropriate index. Just because a mutual fund is
an index mutual fund, it does not guarantee a performance superior
to an actively managed mutual fund. There are no absolute guarantees
in investing. When reviewing any backtested performance information
on this internet site, please read the Disclosure for Backtested
Performance Information (click
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Index Funds Advisors, Inc. - 19100 Von Karman., Suite 450 - Irvine, CA 92612-
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