definition for: #DFM

DFM is a Discretionary Fund Manager a way of managing a personalised portfolio of investments where the manager is able to change the funds without asking for the clients permission first. Also known in the UK as a Discretionary Investment Manager. If a UK financial adviser wants to change investment then they have to ask the client first unless the adviser has discretionary permissions, or they outsource to a DFM that does have this permission. DFM's are important in the asset management industry as they pick the most suitable funds for a portfolio based on their research and how they fit in with client need and attitude to risk. DFM's control relatively large flows of fund assets hence they are a kind of gatekeeper that allows good suitable funds into a portfolio and keeps poor unsuitable ones out.

A portfolio manager that has discretionary permission to change client assets without asking for permission to do so first, the DFM has 'discretion' to change the investments, but they have to operate within a mandate pre agreed with the client. This may restrict the type of investment they are allowed to deal with and the overall risk profile of the portfolio.