DFMs give fund managers less than year to perform

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.

Its DFM Research 2013 report found DFMs on average tolerate just ten months of underperformance before replacing a manager. Around 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 who have suffered 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 when selecting a manager...