Discretionary And Principal Investment

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Discretionary Management Meaning

In discretionary management, an investment professional (manager) makes investment decisions based on the client's risk profile and financial goals. Discretionary investment is particularly relevant for high-net-worth individuals and institutional investors. When clients transfer their capital for discretionary management, they:

• Are relieved from the need to make investment decisions themselves.
• Gain access to opportunities for higher returns and economies of scale.
• Benefit from the expertise of professionals.
• Investments are made at the portfolio manager's discretion but in alignment with the client's strategies and goals.

In contrast, non-discretionary management involves the manager conducting market research and providing recommendations, but the client decides to invest. This method reduces the manager's responsibility and lengthens the decision-making process.

Principal investments refer to money, securities, property rights, and other assets invested to generate profits and increase capital.