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DFM is an answer to rebalancing client portfolios

The Ethical Partnership director Jeremy Newbegin says the key benefit of discretionary fund management services is the ability to rebalance all client portfolios at the same time.

Newbegin, who designed the socially responsible DFM service available from Minerva Fund Managers through the Avalon platform, says good advisers regularly review clients’ portfolios but as they cannot physically do this for all clients at the same time, the timing may be wrong for some portfolios. Using a DFM means portfolios are constantly under review and any rebalancing that is deemed necessary will take place
at the same time for everybody.

All the Avalon/Minerva socially responsible portfolios except the conservative portfolio were rebalanced in January to invest the maximum 20 per cent allowed in cash. This was to be reduced in February but was delayed because this would have meant chasing a rising market, then moving back to the maximum cash position a few weeks later. It is expected the portfolios will be fully invested over the summer.

The investment strategy of the conservative portfolio is also changing to include funds that invest in equities, but this will be restricted to a 20 per cent weighting.

Newbegin says some IFAs will be concerned that using a DFM could potentially undermine their relationship with clients, but says this is an issue that advisers have to deal with by putting clients first.

He says: “Some big IFAs have their own res earch teams and DFM services but a lot do not have this. They are looking at DFMs and fund of funds as a solution to making sure asset allocation is up to date and up to scratch. Some will be worried it undermines their position with clients but I have only had one client who has been unhappy.”


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