ABSTRACT
If the trust instrument was silent as to the trustees’ power of investment, the trustees were authorised to invest by reference to the statutory default provisions enacted in the Trustee Investment Act 1961. This Act permitted trustees to invest in fixed interest investments and equities without abandoning the policy of caution of safe investments. The 1961 Act restricted trust investments in authorised investments. The Act divided investments into ‘narrower range’ (fixed rate investments) and ‘wider range’ investments (shares in public companies). Trustees were entitled to invest the entire trust fund in narrower range investments. These were investments which could be made with professional advice (Part II narrower range investments, such as gilts and fixed rate interest) or without advice (Part I narrower range investments, such as government bonds and savings accounts). However, if they wanted to invest in shares, the fund was required to be divided into two parts – narrower range (up to 25%) and wider range (up to 75%) – and the wider range part of the fund could be invested in equities. The 1961 Act was criticised as being unduly restrictive. What was needed was, first, power on the part of trustees to utilise professional advice by delegating the entire process of selecting and acquiring investments to professional persons (see now ‘Collective delegation under the Trustee Act 2000’, pp 499-500 above); and, secondly, power on the part of trustees to invest the trust fund in more varied and contemporary forms of investments, which would reflect the fundamental changes in the way investment business is transacted today.
