Euro 2016: Think like a fund manager to build a winning fantasy football team

Marcus Morris-Eyton
Roy Hodgson will have to weather a combination of short-term shocks and longer-term conditions to come out on top in Euro 2016 (Source: Getty)

Fantasy Football has developed into one of the world’s most popular online sports games. Forbes estimates that 1.2bn hours are spent playing the US version every year. But although the game is light hearted fun for most people, its clear parallels with asset management show what a serious business it can be.

In Fantasy Football, individuals aim to outperform their peers by selecting a collection – or portfolio – of players. These footballers are then prescribed a value which fluctuates over the season depending on their performance. As enthusiasts will tell you, picking a team involves diligent analysis of a footballer’s recent form, cost and upcoming fixtures. The real challenge, though, is to maximise your selection’s quality within a limited budget.

In the game, players must build a squad within an initial budget of £100m, 11 of whom count towards your weekly score. Player values typically range from £14m (for a high profile goal scorer) to £4m (for reserve goal keepers), such that any expensive signings must usually be offset with lesser-known footballers where expectations are lower.

This creates the classic dilemma: do you choose one star footballer at a high price, or several lesser-known players at the cost of potentially more reliable, profitable gains?

Read more: Investors are setting up a financial fantasy football league

As someone who works on quality/growth-biased equity funds, the quandary is immediately familiar. Stock-picking often comes down to a choice between consistent performers like Reckitt Benckiser or a potentially mispriced opportunity like Shell. Personally, I tend to favour the Harry Kanes to the Mario Balotellis of this world. But ultimately this is a personal choice which comes down to a matter of management style.

The scope this offers for different approaches to success is part of the fun. And in football and fund management alike, performance and team selection is transparent, ranked, and unfortunately frequently open to rebuke from smug friends. Yet this transparency can also encourage short-term thinking, leading people to chase momentum and create crowded or “consensus” trades.

This is where differentiation becomes important. With enough research and a clear understanding of the conditions ahead, a far-sighted manager can come to a firm belief in a hidden growth stock, or football player, leading to top performances that are uncorrelated with the field. Like Claudio Ranieri’s faith in Jamie Vardy, these kinds of seemingly counter-intuitive decisions can be the most rewarding.

In fund management, portfolio managers have to weather a combination of short-term shocks and longer-term macro-economic conditions. In the same way, for the coming Euro 2016 tournament, England manager Roy Hodgson will have to decide whether he adapts his team’s strategy on a case-by-case basis or, as looks likely, is loyal to proven performers.

Despite all the punditry and armchair managers, there is never a right or wrong way to manage, as countless success stories in both industries have shown. However, thorough preparation, in-depth research and genuine conviction is likely to reward fund managers and football enthusiasts alike.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.