From Adviser Guide:
Outsourcing fund management part 1 1hr
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).
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.
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More in this guide
- Q: What is outsourcing?
- Q: What are the different outsourcing options?
- Q: What are the pros of outsourcing?
- Q: What are the cons of outsourcing?
- Q: What are the FSA’s requirements for outsourcing?
- Q: How do I assess if a DFM is right for my clients?
- Q: How do I narrow my search for a DFM?
- Q: What questions should I ask a DFM?