Discretionary Fund Management (DFM) is a financial service where a professional portfolio manager or investment manager is given the authority to make investment decisions on behalf of a client without requiring their explicit approval for each trade or investment action. In DFM, the client delegates the day-to-day management of their investment portfolio to the discretion of the fund manager or financial advisor.
Here are key features and aspects of Discretionary Fund Management:
Delegated Authority: The client entrusts the investment decisions to a professional fund manager or advisory team. This includes decisions regarding asset allocation, security selection, buying and selling of investments, and portfolio rebalancing.
Customization: While the manager has discretion, the client's financial goals, risk tolerance, and any specific preferences are taken into account when designing and managing the portfolio. The portfolio is typically tailored to meet the client's objectives.
Professional Expertise: DFM is commonly used by individuals, families, trusts, and institutions who may not have the expertise or time to manage their investments actively. The fund manager's expertise is crucial in making informed investment choices.
Risk Management: The manager is responsible for managing the risk within the portfolio, ensuring it aligns with the client's risk tolerance and investment objectives. They may adjust the portfolio's allocation based on market conditions.
Reporting and Transparency: Clients typically receive regular reports detailing the performance of their portfolio and any investment decisions made by the fund manager. This provides transparency and accountability.
Regulation: DFM services are subject to financial regulations and oversight in many jurisdictions to protect the interests of clients. Fund managers are often required to act in the best interests of their clients.
Asset Types: DFM can involve various asset classes, including equities, fixed-income securities, alternative investments, and cash equivalents. The asset mix depends on the client's objectives and risk profile.
Long-Term Focus: DFM often takes a long-term investment approach, but it can also adapt to changing market conditions as needed.
Client Involvement: While the client delegates authority, they still maintain overall control by setting the investment objectives, risk tolerance, and any specific investment restrictions or preferences.
Discretionary Fund Management can provide convenience and access to professional investment expertise, making it a suitable option for individuals and institutions looking to have their assets actively managed while maintaining a personalized approach to their investment strategy. We at reWealth have our very own DFM in partnership with Inn8/Stanlib Asset Management. Our award winning DFM has a wide fund range which is tailored to suite the needs of each individual - Feel free to chat to us about how you can Invest in our DFM. Our Q2 update is attached below.
Disclaimer: The financial advice provided here is for informational purposes only. It does not constitute personalized financial, investment, or legal advice. Individual circumstances vary, and it is essential to consult with a qualified financial professional before making any financial decisions or investments.
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