What I learned watching Spain win the World Cup

One implied criticism of watching Spain is that it can be boring – endless short passes back and forth around the edge of the penalty box, often without any final pass or shot. In reality they are remaining patient, trying to manipulate the opposition into creating space and opportunity for Spain to strike.

We see similar characteristics with well managed portfolios – the manager won’t try to force themselves into too large an active position, unless the opportunity merits it. It is quite OK to run less active risk when the environment isn’t supportive, we want managers to keep optionality such that when the great opportunity does arrive, they are able to take advantage of it.

Spain only conceded a single goal in the entire tournament – the fewest ever conceded during a World Cup-winning campaign. They were rock-solid in defence which meant that they never had to play from behind and feel the pressure of a potential early exit from the tournament. This in turn allowed them to focus on playing how they wanted to play.

We would absolutely subscribe to this view for managers – we want to see managers who are aware of downside risk and aim to mitigate drawdowns. We believe that the investment journey is just as important as the destination, especially for nervous investors who might not be able to stomach extreme short-term volatility even though the long-term returns are attractive. In addition, many of the best investment opportunities can be found around market troughs, so the ability to be able to put capital to work from a strong starting point is key.

In summary, we learned from Spain that having an authentic identity or philosophy is important, along with having the confidence to stick with it and to pick your opportunities judiciously. And conceding no goals makes it really hard to lose!