We use cookies to improve site performance and enhance your user experience. If you'd like to disable cookies on this device, please see our cookie management page.
If you close this message or continue to use this site, you consent to our use of cookies on this devise in accordance with our cookie policy, unless you disable them.

In association with

Home > Training > Adviser Guides

From Adviser Guide: Outsourcing fund management part 1

Q: What is a discretionary fund manager?

A discretionary fund manager is a professional third party manager working to set parameters in terms of portfolio choices (risk profile, client preferences, etc).

By Emma Ann Hughes | Published May 09, 2012 | comments

He (or she) works for the benefit of the client and his remit is two-fold: to maximise growth in the portfolio and to protect the fund against falling markets.

Mark Soonaye, product director of Octopus Investments, said the client and the DFM must sign a discretionary management agreement that sets out the terms of the relationship.

There are broadly two types of DFM, according to Mr Soonaye:

* A traditional DFM will build a bespoke portfolio for clients, and typically requires at least a £250,000 minimum investment.

* Other DFMs offer discretionary model portfolios – these are typically risk rated (but not bespoke). These model portfolios are cheaper, and they have much lower (or zero) minimum investment amounts.

Carl Lamb, managing director of Almary Green, said a DFM is a highly specialised financial guru who has the expertise to read market changes and the confidence to take detailed decisions about investment placement.

Finished reading all the other articles in this Guide?Bank 1hr of Structured CPD

Most Popular
More on FTAdviser