A guide to investment for trustees 6 The Act came into force on 1 February 2001 in England and Wales only. Since 29 July 2002 it has also become applicable in Northern Ireland. The Charities and Trustee Investment (Scotland) Act 2005 applies in Scotland and although there are some differences, the general principles are broadly similar. Similar legislation applies in the Isle of Man under the Trustee Act 2001. The previous Act, the Trustee Investments Act 1961, imposed limitations on the differing types of investment that trustees could select. Now trustees can make an investment of any kind, as if they were absolutely entitled to the trust assets. This power is subject to any restrictions imposed in the trust deed. The Act also introduced the need for any investment selected to satisfy the standard investment criteria : this is basically a combination of suitability and diversification (see page 7). The fundamental principle for trustees to consider is whether by acquiring or retaining any investment they are able to properly discharge their duties under the Act with regards to its suitability, the need for diversification and taking advice at outset and at review. To complement these less restrictive investment powers, the Act facilitates more effective trust administration. For example, the trustees can delegate certain decision-making functions that do not relate to the distribution of trust assets or the appointment/dismissal of trustees. These fiduciary powers (i.e., powers to administer the trust) include, where appropriate, delegating the management of investments to an agent, such as a discretionary fund manager . Such a situation would require the trustees to give written guidance to the agent on how the investment management should be exercised in the best interests of the beneficiaries. This would include the desired balance between capital growth and income, any ethical considerations, asset allocation, risk profile, investment term, use of tax exemptions and reliefs and easy access to an appropriate level of cash. Trustees are not liable for acts or defaults of an agent unless they, the trustees, have failed in their duty of care in the selection of such an agent. The Act also states that professional trustees, agents, nominees, custodians and investment advisers can receive payment for their work even if there is no specific clause in the trust allowing this. Similarly, expenses properly incurred when acting on behalf of the trust can be reimbursed. Trustee Act 2000 The Trustee Act 2000 (the Act) was introduced to improve and update the existing provisions which had become increasingly complex and out of date. The changes mean trustees are required to be more proactive in the running of the trust and seek advice where required.