California Investment Laws (California Probate Code)

Sec. 2101 “Fiduciary Relationship.

The relationship of guardian and ward and of conservator and conservatee is a fiduciary relationship that is governed by the law of trusts, except as provided in this division.” This section places conservators and guardians under the obligation to comply with the Uniform Prudent Investor Act (UPIA), but are more restricted under Sec. 2574 than a trustee in what assets they may employ without seeking prior court approval.

Sec. 2574, titled, “No Authorization Required for Certain Purchases.”

This section lists the specific types of investments that conservators and guardians may acquire without court approval. Though other investments may be used, they require prior approval. 

• Secs. 16045 - 16054, the “Uniform Prudent Investor Act,”

“Prudent Investor Rule” is trust investment law enacted by California and embraces the most current concepts of prudent investing.” UPIA admonish fiduciaries to embrace the principles of Modern PortfolioTheory (see Exhibit 5, fourth paragraph) an investment methodology that has garnered three Nobel Prizes in economics. 

Modern Portfolio Theory is founded on research demonstrating that investment risk may be best managed at the portfolio level (as opposed to the individual asset level) through careful diversification, not through market timing or stock picking.