Which statement best distinguishes fiduciary duties from portfolio management duties?

• A. Fiduciaries must act in the best interests of beneficiaries; portfolio managers implement the investment strategy.
• B. Portfolio managers implement the investment strategy.
• C. Fiduciaries collect fees regardless of performance.
• D. Portfolio managers have fiduciary duties.

Answer: (A)

Fiduciaries have a duty of loyalty and care to beneficiaries, meaning they must act in the beneficiaries’ best interests and manage the assets with prudence and without conflicts. The distinction here is that fiduciaries set and oversee the investment expectations and policies, while portfolio managers are the ones who carry out those policies by selecting securities, adjusting allocations, and rebalancing to implement the strategy.

So the best statement captures this split: fiduciaries are responsible for acting in the beneficiaries’ best interests, and portfolio managers handle the actual execution of the investment strategy. The other options either describe only one side of the relationship without addressing the fiduciary standard, imply that fiduciaries collect fees regardless of performance (not accurate), or incorrectly state that portfolio managers inherently have fiduciary duties in all contexts.