What is discretionary fund management?

How we choose a discretionary fund manager

As you’d expect from Abode Financial Planning, we take a lot of time choosing the right DFM for this is a critical part of our clients’ financial journey.

The DFM needs to align with our culture and investment philosophy so we can work together to meet our clients’ needs. In addition, they need to have a strong performance track record.

A Discretionary Fund Manager’s corporate structure, fees and service levels are also part of our due diligence process. Our clients trust us to help them reach their goals, and we know that being 100% confident in the DFM we work with is critical to success.

What are the benefits of discretionary fund management?

The benefits of discretionary fund management are numerous. Here’s a breakdown of the key advantages:

Continuous monitoring and adjustments of your portfolio

A DFM doesn’t just set and forget your portfolio. They continuously monitor the investment markets and trends, adjusting portfolios as required for the long-term benefit of clients. This ongoing oversight ensures your investments stay on track toward your long-term goals.

Expertise and professional management

By using discretionary fund management, you gain access to the expertise of highly qualified professionals who have a deep understanding of the markets. They’re well-equipped to make the right decisions at the right time, helping to grow and protect your wealth over the long term.

Enhanced diversification through factor exposure

At Abode Financial Planning, we use an evidence-based (also known as factor based) investment philosophy.

A DFM using an evidence-based investing approach can enhance the diversification of your portfolio by focusing on a range of factors that have been shown, through evidence and research, to generate superior returns over time. By tilting towards factors such as value, momentum, size, and quality, your investment portfolio can better manage risk and tap into different sources of long-term returns.

This approach aligns more closely with passive indexing strategies, giving you broad exposure to proven market drivers while avoiding the need for active stock picking.

Cost-effective portfolio construction

One of the key benefits of using a discretionary fund manager with a passive, factor-investing strategy is the cost-efficiency it can offer. Passive indexing, combined with factor-based investing, tends to be less expensive than active management, which often involves higher fees for stock selection and frequent trading.

By leveraging evidence-based strategies, your portfolio can be efficiently constructed to maximise returns without the associated costs of more traditional active management. Remember, every pound you save in charges remains in your portfolio to grow over time.

How do discretionary fund managers protect your money?

DFMs manage investment portfolios but don’t hold or have any access to our clients’ money. (This is held by the platform).

They monitor portfolios constantly, rebalancing when required to ensure they remain within our client’s risk appetite. Abode Financial Planning oversee the performance of our clients’ portfolios, giving the extra peace of mind that comes with knowing there are many eyes on your money.

The expertise and focus of the DFM, coupled with Abode Financial’s planning and oversight give you the best chance to keep on the right track to meet your financial goals.

Please note that DFM solutions aren’t suitable for everyone. Whenever this is the case, we will work with you and organise a suitable alternative.

Ready to take control of your financial future?

If you want to learn more about what is discretionary fund management and how it can help protect and grow your wealth, we’re here to help.

Get in touch with Abode Financial Planning in Cirencester for a no-obligation chat, and let’s start planning for your financial success.