Manage Your Portfolio Like a Football Team


The football season is back, which is a godsend for some and a nightmare for others. But it has prompted us to refresh an article we produced a few years ago drawing comparisons between portfolio and football team management. So, at least when you’re forced to sit through boring talks about 4-4-2 and why Steve Bruce isn’t the right fit you can at least get something from it. If on the other hand you fancy yourself as a Fantasy Football genius or think your Football Manager exploits deserve an England call up, why not double down and apply these skills to improve your portfolio?   

Kicking off, one immediate trait the football and investment landscape share is the fast-paced nature of change. To recap, the last time we produced this article Leicester City had just won the title and Sunderland weren’t Netflix stars. We were also just about to win a comfortable vote to remain in the European Union and Hillary Clinton was deciding what CDs she’d have in the Presidential car. Well, needless to say plans change and we face a very different opponent and outlook these days, hence why a portfolio refresh may be worth doing.   

‘Back to square one’

The origins of this phrase are derived from early football radio broadcasts, where the pitch was divided into squares to help listeners know where the ball was. Whether you have investment experience or not, starting with some key fundamentals are essential, this effectively is the portfolio pre-season, set out clear objectives and give yourself a time horizon. Any team / portfolio shouldn’t be assembled with a one size fits all approach.

So, be realistic, are you Manchester City pre or post takeover? Consider performance as a relative concept, because some assets may achieve higher returns because of higher risk or favourable one-off tailwinds. If you’re selecting a manager keep in mind that performance won’t be a straight line.  Past and future performance inevitably will fluctuate so avoid the pitfall of a wonder year’s returns. Take for example Alan Pardew’s tenure at Newcastle. Looking at his best year he managed a 5th place finish, but this was between a 12th and 16th place finish respectively. Swiftly moving on….

So, when considering your ‘gaffer’ it is important to understand what their objective is and how they help your own. Don’t be expecting a defensive portfolio to make you rich overnight is the thought behind this, in the way you don’t expect Allardyce to employ free flowing Tiki-Taka style football.


Watching Liverpool’s valiant efforts for the title last year highlighted the importance of a good defence, with Van Dijk as effective at stopping goals as the Irish backstop is at stopping Brexit. This is the no-nonsense end of the portfolio. Investors will look at typically defensive assets, bonds, large established multinationals or non-cyclical stocks. Recently we have seen traditional safe havens like gold in high demand as trade tensions intensify, and in some cases defensive hedges can add alpha, consider international earners on the FTSE since Brexit, but also don’t be afraid to park the bus when too many risks lie in wait, the flare is for other areas of the portfolio.


Just like any football midfield, the mix can vary depending on what your faced with. Sometimes the midfield or core of a portfolio can be set up more defensively and visa-versa. A portfolio’s midfield should be comprised of good quality assets but that also provide a little more scope for returns. Think the Andrea Pirlo of assets. The changes from defence to the midfield may be comparable to switching from government bonds to corporate bonds or moving down the market cap scale. Either way sometimes quality isn’t cheap but remember to not fill the midfield with the same players or assets, as it’s a dynamic area.


These are in the portfolio to make a difference. These are the stocks that typically have scope for larger gains and if you’ve assembled the rest of the portfolio well, should be allowed to miss the target at times. Like in a football team these will make up a smaller concentration, so don’t get greedy with effectively a position that means you’re susceptible to a counterattack, especially when Trump can reverse markets with one tweet. At Vertem we have a large investable universe, meaning we don’t disregard smaller companies. Amongst other things we do differently, this allows us access to many stocks others don’t due to them falling outside of set parameters. Many clubs would’ve disregarded Messi due to his small stature and think how this has ultimately turned out. We’ll say no more.


Often their importance is downplayed, but that’s why they’re often unsung heroes. And in both investment and football, they’re vitally important. Cash is possibly the best example, there to be used when the right idea or scenario presents itself, like a true impact sub. As a game evolves, the manager will have ideas about who they may replace, the same way a portfolio manager will likely have a watchlist of potential replacements in terms of asset allocation as the economic environment fluctuates. Don’t get emotionally attached to an asset, which is the equivalent of the manager who plays his son no matter how detrimental he is to the team.

In conclusion, remember that it doesn’t always go to plan, so if you have an idea sometimes know when to stop flogging a dead horse, assemble a portfolio like a team rather than a bunch of individuals and stick to your initial objectives, for fear of scrapping basic principles. All being well you should hopefully reap the dividends and potentially win the Fantasy sweep at work.

Leave a Reply