In essence and in very simplistic terms the role of a discretionary fund manager (DFM) is to 'manage the managers' - in other words a discretionary fund manager is responsible for a number of tasks that include the initial and ongoing research of funds and fund managers , performing various due diligence activities on each of the funds and fund managers, the initial portfolio construction , periodic portfolio reporting and the all important continuous portfolio analysis and re-alignment of positions according to economic and mandate factors when required.
If you are an existing investor it may help if you first think and consider how you made previous investment decisions.
- what objective criteria did you have for your investments ?
- what research did you employ ?
- what risk evaluations did you perform ?
- how you did you apply selection criteria ?
- what on-going monitoring , re-balancing and market assessments are now being applied?
Some investors would ask :
- Does a DFM really bring value to the investment portfolio ? - after all most of us have the ability to buy funds , stocks and shares without using a DFM.
- Can DFM charges be warranted ?
We believe the answers to the last two questions are an emphatic YES for the vast majority of investors
Lets now take a closer look at what a Discretionary Fund Manager does , how he does it , why he does it and the value provided to investors.