ERISA imposes upon a fiduciary a duty to diversify plan investments "so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so." The duty to diversify under ERISA, however, cannot be waived by agreement between the plan sponsor and fiduciary.

The ERISA conferees believed that a fixed percentage could not describe the degree of investment concentration necessary to violate the diversification requirement because a prudent fiduciary must consider the facts and circumstances surrounding each plan and each investment. Accordingly, the ERISA Conference Report enumerated factors which a fiduciary should consider: (a) the purpose of the plan; (b) the size of the investment; (c) the economic and market conditions; (d) the type of investment, either debt or equity; (e) the geographic dispersion of investments; (f) the investment distribution among industries; and (g) the dates of maturity. ERISA Conf. Rep. at 304.