In a world where liquidity and capital efficiency are more crucial than ever, companies are increasingly looking beyond traditional banking solutions to manage their excess cash. One often underexplored yet highly effective avenue is Discretionary Portfolio Management (DPM). Though commonly associated with high-net-worth individuals and family offices, DPM offers significant advantages for corporates seeking to preserve capital, optimise returns, and enhance financial governance.
What Is DPM?
In simple terms, Discretionary Portfolio Management is a bespoke investment service where a licensed asset manager makes day-to-day investment decisions on behalf of the customer within an agreed risk and return framework. Unlike advisory mandates, where the customer must approve every transaction, DPM offers corporates a delegated yet controlled approach to managing their financial assets. The investment strategy is aligned with the company’s liquidity needs, time horizon, and risk appetite, all agreed at the outset and reviewed periodically.
How Can Corporates Save Time While Staying in Control?
DPM offers corporates an efficient way to manage surplus cash by outsourcing day-to-day investment decisions to professional managers, freeing up internal resources for core business functions. While the portfolio is actively managed, companies retain full strategic control through clear mandates, regular reporting, and transparent oversight – achieving both time savings and effective governance.
Is It Safe? What About Risk?
A common misconception is that discretionary mandates introduce greater risk. Ideally DPM portfolios should be designed within clearly defined boundaries, aligned with regulatory requirements and each customer’s specific objectives – whether that’s capital preservation, income generation, or balanced growth.
For corporates, this means a disciplined, risk-adjusted way to put surplus funds to work without venturing into speculative territory. A diversified portfolio typically includes bonds, money market instruments, and blue-chip equities, with active management of credit risk, interest rate exposure, and market volatility to protect and grow capital responsibly.
What Returns Can Be Achieved on Idle Cash?
In an era of persistent inflation and rising opportunity costs, leaving cash idle in a deposit account or current account is often suboptimal. While traditional bank deposits may offer some security, they rarely offer meaningful real returns after inflation.
With Discretionary Portfolio Management, corporates could generate incremental returns without compromising liquidity. Portfolios can be structured to match short, medium, or long-term funding needs, with laddered maturities or liquid instruments depending on the company’s cash flow profile. This approach helps avoid “cash drag” – the performance loss incurred when capital sits unused or underutilised.
What Makes Discretionary Portfolio Management So Customisable?
No two businesses are the same, and that’s precisely why DPM solutions should be tailored, not templated. Whether a company is setting aside capital for a future acquisition, managing reserves more dynamically, or optimising surplus funds across jurisdictions, customised and scalable portfolios are constructed to align with specific objectives. Furthermore, access to institutional-grade insights – ranging from macroeconomic analysis to market forecasts and credit assessments – supports not just investment performance but also broader strategic decision-making.
How Does DPM Align with Strong Corporate Governance?
Another benefit of Discretionary Portfolio Management for corporates is its alignment with strong governance principles. Corporates may engage regulated discretionary managers to ensure that the investment activity is professionally supervised, reducing the risk of conflict of interest or mismanagement.
A regulated discretionary manager should ensure that the investment process is fully documented and auditable, which supports compliance with internal policies and external audits. This is especially valuable for companies with a board, investment committee, or compliance officer who must oversee treasury activities.
Is Now the Right Time to Consider DPM?
Today’s forward-thinking CFOs are expected to do more than count numbers – they must strategically steward capital to support the company’s vision and resilience. DPM is a natural evolution for businesses that want to make their capital work harder without compromising oversight, transparency, or security.
In today’s competitive economic environment, Discretionary Portfolio Management is not a luxury – it is a smart, structured, and scalable solution that corporates should seriously consider.
Written by
Mark Vella
Investment Business Development Manager, ReAPS Asset Management Ltd
The information contained in this article represents the opinion of the contributor and is solely provided for information purposes. It is not to be interpreted as investment advice, or to be used or considered as an offer, or a solicitation to sell / buy or subscribe for any financial instruments and/ or investment services nor to constitute any advice or recommendation with respect to such financial instruments and/ or investment services. This article was issued by ReAPS Asset Management Limited, a subsidiary of APS Bank plc. ReAPS Asset Management Limited (C77747) with registered address at APS Centre, Tower Street, Birkirkara BKR 4012 is regulated by the Malta Financial Services Authority as a UCITS Management Company and to carry out Investment Services activities under the Investment Services Act 1994 and is registered as an Investment Manager under the Retirement Pensions Act.
