Many trusts are established specifically to facilitate investment activity. Many managed investment schemes and most superannuation funds, for instance, employ the legal architecture of the trust. Parties may also create specialised trust structures that are not open to the public in order to arrange their investment affairs. The trust is a convenient device to enable a collection of investor monies under the management control of a party with experience and skills in the business of investing. The need for a trustee to invest trust assets can arise in other circumstances. The most obvious of these is where the trust is expected to exist for some time and has assets that are not specifically nominated in the trust instrument as assets that must be held by the trustee. In this situation, a trustee is likely to be subject to a duty, implied from the circumstances of the trust, to invest unallocated assets. This chapter examines the rules that apply to the investment of trust funds. It takes the statutory regime as its starting point but also illustrates the interplay between the statutory and general law rules that apply in different contexts.

This chapter, along with Chapters 5 to 6, examines the legal duties that constrain accumulation once a charity has been created. Controller duties (e.g. directors’ duties and trustee duties) are the focus of this chapter. Clearly, duties of loyalty, good faith and of care and diligence can potentially play a restraining role in relation to agency costs, the risk of which can be heightened by accumulation. Further, controller duties also raise the possibility of regulating the retention and distribution of charity assets by controllers, thus affecting the intergenerational distribution of benefits. The chapter provides an overview of the controller duties arising from each of the main legal forms adopted by charities and analyzes the impact of those duties on accumulation. Particular attention is paid to duties arising on the exercise of discretionary powers, such as the duties to act upon genuine consideration and to act impartially. Examples are provided primarily from Australia, the United Kingdom and the United States.