Fiduciaries of pension plan assets will be given wider latitude to make investments without risking personal liability under a proposed regulation issued today by the Department of Labor.

The so-called "prudent man" rule will not hold investment mangers responsible for a single poor investment, provided the overall portfolio had been invested wisely. DOL sets forth five basic factors for evaluating a prudent investment.

The regulation also states that the relative risk of a specific investment or investment course of action does not make it prudent or imprudent. Written comments should be addressed to DOL's Pension and Welfare Benefits Programs section before June 26.

The prudence issue arouse with the passage of the 1974 Employe Retirement Income Security Act (ERISA), which stipulated that a fiduciary should discharge his duties "with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims."

As plan administrators rushed to increase their liability insurance against the possiblity of participants, they also clammored for a clarification of the act's language. The attitude toward investments was one of extreme caution. The recession was also a dampening factor.

In 1976, the International Foundation of Employe Benefit Plans found that 64 percent of the trustees it surveyed were unwilling to invest in anything but blue-chip securities.

Concentration resulted. Georgetown Law School professor Roy Schotland found that seven banks, six of them in New York, managed nearly one-fifth of all the pension funds assets in the country.

The basic factors for evaluating prudent investments were announced last August by Ian Lanoff, administrator of Pension and Welfare Benefit Programs. Incorporated into the regulation published today in the Federal Register, they oblige the manager to consider:

The composition of the plan investment portfolio with regard to the diversification of risk.

The volatility of the portfolio with regard to general movement in investment prices.

The liquidity relative to the projected payment schedule for benefits.

The projected return relative to funding objectives.

The prevailing and projected economic conditions of the investments.