The World Cup Investor, Part 7: The manager’s style of play

As the World Cup reaches the semi-final stage, the tournament has done what it always does: tested every philosophy of how the game should be played, under pressure, against different opponents and in different conditions.

We have seen possession sides patiently pass their way through deep defensive blocks before looking vulnerable to one rapid counterattack, high-pressing teams suffocate opponents into mistakes before being exposed when a single pass breaks the press and counter-attacking sides absorb pressure and strike with precision.

Four teams remain and the tournament has made one point clear: no single style works in every match. Each approach has looked dominant when conditions suited it and vulnerable when they did not.

The teams still standing are not there because they found a perfect style. They are there because they understood their own style, recognised the conditions in which it was most effective and managed the areas where it could be exposed.

That is the purpose of a style in football. It gives a team a clear identity, a repeatable way to create chances, control risk and make decisions under pressure. It does not remove vulnerability. It defines how the team intends to win, where it has an edge and where it needs protection.

Some styles are explicit; others sit beneath the surface and only become clear when market conditions change

Investment styles work in exactly the same way.

Every fund, portfolio and strategy has a style. Some are explicit; others sit beneath the surface and only become clear when market conditions change.

A portfolio may be predominantly active, relying on manager judgement and security selection to add value beyond the market. It may be passive, designed to track an index efficiently and at low cost. It may be blended, combining active and passive exposures to balance cost, consistency and the potential for outperformance.

It may also carry factor tilts towards value, quality, momentum or smaller companies, each of which behaves differently across market environments.

The purpose of an investment style is not to outperform in every environment. It is to define the source of return being targeted, the type of risk being accepted and the role that exposure is expected to play in the wider portfolio.

Each has a distinct profile and understanding that profile is central to building portfolios that behave as intended

Like a football approach, each investment style has environments in which it looks highly effective and others in which it can be exposed. That is not a weakness. It is the consequence of having a defined approach.

What matters is understanding which style is being used, why it is in the portfolio, when it is expected to perform well and when it may lag.

A value style, for example, can perform strongly when markets reward companies trading at lower valuations, but may struggle when returns are dominated by a narrow group of higher-growth businesses.

A growth style does the reverse, benefiting when investors are willing to pay for expansion and earnings momentum, but becoming more vulnerable when those valuations are repriced.

Neither is inherently right or wrong. Each has a distinct profile and understanding that profile is central to building portfolios that behave as intended.

A manager does not abandon a possession-based approach simply because it struggles against a disciplined low block

This is where the comparison becomes most useful for advisers and clients. A manager does not abandon a possession-based approach simply because it struggles against a disciplined low block. They recognise that the matchup is testing the style in one of its harder conditions, not proving that the style has failed.

The same approach may look far more effective against an opponent who presses higher and leaves space behind. Investors face the same challenge: judging a style by whether it behaves as expected in the conditions it was built for, rather than expecting it to lead in every environment.

When a value-oriented portfolio underperforms during a growth-led rally, that is not necessarily evidence that something has gone wrong. It may simply be the style behaving as expected in an environment that does not favour it, just as a counter-attacking side can look ineffective against an opponent who refuses to leave space behind.

The mistake is to abandon the style at precisely the point when patience matters most: selling the possession side because it struggled against a difficult matchup or replacing a disciplined investment approach because it lagged during the part of the cycle that was always likely to be difficult.

The World Cup Investor, Part 4: The Pressing Trap

Constantly switching between styles is the investment equivalent of changing the entire game plan after every difficult fixture. It may feel responsive, but it rarely reflects discipline.

There is also a more important point for portfolio oversight. The main risk is not holding a style that has temporarily fallen out of favour. It is holding a style exposure the adviser, portfolio manager or client did not realise was there.

In football, a manager may believe they have built a balanced side, only to discover under pressure that one weakness dominates everything else. A team that looks composed in possession can look far less balanced the moment it is pressed aggressively.

The issue is not only execution; it is self-knowledge. The manager did not fully understand where the team was exposed.

The number of holdings suggests balance; the behaviour of those holdings tells a different story

Portfolios carry the same risk. Consider a portfolio that has delivered excellent returns over three strong years in the market. On the surface it looks diversified, holding several hundred companies across multiple funds. But because those funds have each gravitated towards the same handful of large, high-growth names that led the market, the portfolio has quietly become heavily concentrated in a single style.

The number of holdings suggests balance; the behaviour of those holdings tells a different story. While that style leads, the concentration is almost invisible, because it is being rewarded. Then conditions change, that style falls out of favour, and the same concentration that drove the gains now drives a sharper fall than the client ever expected, revealing an exposure they never knowingly chose.

Understanding style also changes how performance should be judged over time. Strong performance should prompt scrutiny as well as satisfaction: is the result broad-based, or has it been driven by one style that happens to be in favour?

Without a clear understanding of style, advisers and clients risk reacting to outcomes without understanding their cause

Weaker performance deserves the same discipline in reverse: is the portfolio lagging because its style is temporarily out of favour but still behaving as expected, or because the style no longer fits the client’s needs? Those are very different conclusions.

Without a clear understanding of style, advisers and clients risk reacting to outcomes without understanding their cause, rewarding results that simply reflect a favourable market and abandoning sound approaches during difficulty that was always part of their profile.

The strongest managers left in the tournament have not found a style that works in every situation. No such style exists. They understand exactly what their approach is designed to do, which conditions suit it and where it can be exposed. They play to the strengths of their system while remaining clear about its vulnerabilities.

Style is not something to eliminate. It is something to identify, choose deliberately and manage with discipline

That is what good investment management requires. Not a search for one perfect style that outperforms in every environment, but a clear understanding of the styles a portfolio actually carries, the conditions in which each may lead or lag, and whether the overall mix remains appropriate for the client’s objectives.

Style is not something to eliminate. It is something to identify, choose deliberately and manage with discipline.

The final is almost here. The teams that reach it will have earned their place not by playing one perfect way, but by understanding their own game well enough to survive different tests.

The best portfolios are built on the same principle: know the style, understand the risks, and make sure the overall structure is strong enough for the conditions still to come.

Luke Randle is a junior investment associate at Succession Advisory Services