A Discretionary Fund Manager or ‘DFM’ exercises his professional discretion to buy and sell investments on your behalf. A discretionary management service can deliver highly-tailored investment portfolios based upon your individual circumstances and objectives.

Discretionary Fund Managers are able to:

• Rapidly react to market conditions
• Outperform benchmarks
• Provide a highly bespoke solution
• Demonstrate individual expertise in stock picking
• Re-balance whenever required

Discretionary Fund Management generally has an individual investment manager or committee responsible for investment decisions.

The reasons for using a DFM service are as follows:  

• International Advisors have traditionally produced dismal results for their clients by offering poorly-constructed portfolios that often bear no relation to the client’s risk tolerance.
• Having failed to get results (because of this poor asset allocation and other reasons), they first turned to multi-managers and developed a growing appetite for the outsourcing of investment decisions.
• The market eventually recognised that outsourcing investment decision-making to a competent and professional third party is in the best interests of both the Advisor and the client.
• The prestige and perceived security attached to using a DFM, with the perception of a bespoke service, traditional expertise and good visibility of investments has proved popular with wealthy individuals, who feel the tailored service is worth the premium it carries.
• Legacy products: if you have been ‘orphaned’ and left holding legacy products with no active financial adviser, a DFM is a rational service to use.
• Low-cost passive solutions. A quality DFM should contain low-cost passive solutions and the best ones do.

Caravel Partners uses DFM strategies at the core of its Caravel Diamond and Diamond Plus Strategies.