It may only have been five weeks since the World Cup final – but I have missed competitive football. I could not wait for the Premier League to get started this past weekend, especially to see my beloved Chelsea beat Fulham on Monday night.
Last week was the time when many of us looked to get our fantasy football teams in shape, to go head-to-head with friends and office colleagues over the course of the season.
My track record is not the best – my teenage son beat me last year – but I always look to strike a good balance between defence and attack, as well as adding the odd player who has gone under the radar. Most importantly – I am learning from my mistakes and getting better.
There are a lot of similarities between fund research and fantasy football: despite all the prep and due diligence, your best laid plans can go awry, so you need to be flexible. And that's exactly the type of attitude investors should be looking to employ in these uncertain times.
With this in mind – here are a few tips (and a few red flags) that apply to both investing and fantasy football.
A flexible squad
One of the biggest mistakes fantasy football players make is going too heavy on strikers. You need a balanced squad to succeed, be it a midfielder who creates and scores or a defender who keeps a clean sheet and pops up with the odd goal themselves.
You want the same with an investment portfolio – the ability to switch positions and be as flexible as possible, meaning you can perform in any market environment.
A good option here would be the likes of a multi-asset fund, such as Aegon Diversified Monthly Income, which invests across bonds, equity, property and alternatives exposure.
This gives managers Vincent McEntegart and Debbie King a variety of sources to target an attractive yield of around 5% per annum. It has been a consistent top-quartile performer in the IA Mixed Investment 20-60% Shares sector over the past five years.
Captain – don't be too aggressive
For me, the captain must be a defensive pick – if you do not own Erling Haaland and he has scored two goals in the first 15 minutes of a game you know you are in big trouble. FOMO (the fear of missing out) is real, given that the captain offers double the points in fantasy football and will often be owned by most of your peers.
A solid global fund would be my first port of call here. Fidelity Global Dividend manager Dan Roberts is a chartered accountant and prefers simple understandable businesses with clear cash flows and strong balance sheets.
This leads him to a natural bias against financial stocks which can be both complex and highly levered. Roberts aims to build a portfolio which is more defensive than the market. Since launch, the fund's performance has been strong but, equally impressively, it has also been one of the least volatile in the sector.
Defensive contributions
These are not the most interesting facet of fantasy football – but they matter. Defenders (and sometimes midfielders) get extra points for the likes of tackles, interceptions, clearances and blocks. These are small gains that build up over time if you have the right player.
Ninety One Diversified Income aims to provide investors with attractive, sustainable income and scope for capital growth. It targets a yield of around 4% per annum, distributed monthly, with less than half the volatility of UK equities.
This enables investors to sleep more soundly. Crucially, it has delivered positive returns in 10 of the past 11 calendar years.
Uncorrelated opportunities
If you can find a hidden gem in fantasy football, it can really see your returns skyrocket. A good example is Nottingham Forest's Morgan Gibbs-White, who returned almost 200 points and was owned by less than 10% of Fantasy Premier League (FPL) managers last year.
Jupiter Merian Global Equity Absolute Return has historically enjoyed a low correlation both to global equities and to global bonds – making it an ideal diversifier. This is a long/short equity portfolio fund which targets an absolute return over rolling 12-month periods. The fund's philosophy is that markets are not fully efficient due to several investor behavioural and psychological biases.
The team believe that investment styles are cyclical and seeks to profit by forecasting which styles are most likely to perform in a particular market environment.
The fund holds around 600 to 1,200 positions, both long and short, with a target net exposure of zero. The fund has returned 68% in the past five years.
New players on the block
There is always a player or two who is new to the league and is available at an excellent price. Last year it was Brentford's Igor Thiago, who ended up being one of the highest-scoring players in the game with 22 goals. Get them early and you can get the full upside of their performance.
Managed by Philip Rodrigs, the WS Raynar UK Smaller Companies fund holds between 70 and 90 stocks. Philip's bottom-up approach aims to balance high conviction with diversification in this under-researched market.
He favours firms with strong management teams and clear growth catalysts that are priced at attractive valuations. Philip has an excellent track record from his time at Investec and R&M, and since launching in July 2024 this fund has returned 31% (vs. 11% for the average fund in the IA UK Smaller Companies sector).
Other factors to consider (and a few no-no's)
In fantasy football, defenders get points for clean sheets. But the real standouts offer goals and assists as well. In the investment world you have plenty of offerings that deliver good returns, but also an attractive income – good examples include the Aberdeen Asian Income, which has a dividend yield of 7.85%.
It is also important to find some good enablers; these are cheaper players that offer attractive returns. One that stands out here is Artemis Short-Duration Strategic Bond, which has returned 22% in the past five years and yields 4.8%. All this with an ongoing charge of just 0.39%.
Whatever you do, please remember not to use too many transfers in FPL (they cost you points) – give players time to perform. It is the same in the investment world – "time in the market, not timing the market" is what matters most.
And don't wildcard too early. While changing your team in August to revive its fortunes might make sense in FPL – it is not the most prudent approach to investing.
Darius McDermott is managing director of FundCalibre and Chelsea Financial Services. The views expressed above should not be taken as investment advice.