28th June 2018
Erika Mesmer, Client Relationship Manager
The qualification phase of the Football World Cup is history. Half of the teams made their way to the knockout phase, the other half have finished their tournament. Whether you thoroughly enjoy following this event every four years or try to avoid any talk of football – you cannot avoid the subject!
We have as well suffered of contagion and have decided to take a closer look, in this newsletter, at the similarities and differences between the team manager of a football team and a portfolio manager.
You obviously want “the best” although the way this is identified and defined will change for every person doing the selection. Whether you are selecting the players representing a country or companies composing the winning portfolio, your success will be based on the mix you will be able to put together. 11 goalkeepers will not give you the result hoped for. You want different types of players, which complement each other’s. You want the experienced elements providing calm and serenity in turbulent times as well as finding the new gem able to create the surprise and generate the special performance, making the difference with other teams.
Furthermore both football team managers and portfolio managers are exposed to a lot of noise and external information not relevant to their work. For both, the news flow is such that at times it can be difficult to appreciate what information is relevant to their task. For them to be able to take the right decision, it is important to take a step back, analyse the fundamental values of each and take their final decision based on their personal convictions.
Although there are many similarities in football and active portfolio management, there are of course also many differences. Here we want to look at a major one: the time frame is obviously totally different. To participate to a World Cup means being ready for a very short period of time: each game only lasts 90 minutes and players need to perform at the top of their ability during the specific game. The full event lasts, for the top teams, one month and winner of the World Cup is the team who wins the last game of the tournament. No need to say that for portfolio management, especially with the long term investment horizon we have at IAM, the winning team needs to perform over a much longer period of time.
Whatever team you are supporting at this Football World Cup, we wish it to be as successful as our Swiss equity portfolios have been over the last 22 years.