DFMs give fund managers one year to perform before swinging the axe

Laura Miller
clock • 2 min read

Fund managers can expect the axe from discretionary fund managers (DFMs) if they fail to perform within the first 12 months of being granted a mandate, according to research by Coredata.

DFMs, an increasingly influential distribution channel, on average tolerate just ten months of underperformance before replacing a manager, while half of DFMs say they would replace a fund manager who has underperformed for only six months. This approach is likely to hit cyclical managers hard, as well as those managers who have hit a bad patch with one or two wrong calls. Despite fees and charges coming under increased scrutiny across all aspects of the industry, performance (89%) and perceived trustworthiness (92%) heavily outranked the importance of cost (64%) as a key factor in se...

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