As we approach the end of Season 12, I sit here in the Zurich office having thoroughly enjoyed the past few weeks of cricket and I wonder…’what makes a winning IPL team?’
It is about the pitch hitters!
Six different teams have won the IPL – so behind these victories has the engine been a confident pitch hitter, throwing caution to the wind and sending the ball over the boundary with frequent abundance?
The West Indies Chris Gayle has the record for the most IPL sixes at an impressive 292 and the highest score at 175 not out. In two seasons, Gayle made 733 and 708 runs, including a 30-ball century against Pune Warriors. But with his support cast inconsistent, his team didn’t even make the play-offs. So having the strongest performing batsman, in terms of past performance, doesn’t seem to be the key to winning the IPL.
Is it then about the economical bowlers?
We all love to see the ball clear the boundary rope and be caught in the crowd. But equally we love the tense last over duels between bowler and batsman, the cut and thrust of a run chase in the final moments of the contest. So is the crucial factor then to have the most economical bowler in your team? Australian Andrew Tye is current holder of this plaudit.
Tye was bought by Kings XI Punjab in the 2018 IPL auction. He went on to win the Purple Cap for the 2018 IPL season for taking the most wickets (24) during the season and at an incredibly miserly level of economy. But Chennai Super Kings won in 2018, so despite Tye’s efforts he did not end up on the winning IPL team. So it’s not then about having the best bowler, based on past performance.
What can NRI investors learn from the winning IPL team?
A quick Google search of ‘what is the best IPL team?’ throws up Chennai Super Kings as a candidate and the statistics support this. They have won the IPL three times, joint most for any team – but importantly they are the only team in IPL history to defend their crown.
A key reason for their success has been through building a balanced team, rather than having the single best players – either batsman or bowlers. They have also been incredibly consistent at maintaining the same core to their squad and not looking for huge overhauls from one year to the next. MS Dhoni has demonstrated patience, a key trait for investors also and he clearly doesn’t like to make many changes to his squad. Arguably he would like to play with the same XI for most of the matches.
What can NRI investors learn from the IPL?
As NRI investors, the temptation can be to try and cram a portfolio full of funds that have the best past performance, effectively like looking to select Chris Gayle 11 times! This kind of squad selection would have huge potential for great one match performance, but what we have seen over eleven IPL season is that a balanced and consistent approach to building a team has prevailed.
As an NRI adviser, we need to be thinking like MS Dhoni and the Chennai Super Kings. It’s about recognizing that your clients need attacking options in their portfolio, giving the potential for growth – but these need to be balanced with more defensive asset classes such as fixed income, property and cash. All assets come with inherent risk-reward characteristics and it’s about getting the right balance between them to suit your client’s needs. Some have a greater chance of reward but, as you’d expect, carry greater risk in trying to get it.
Get the balance right
So while over the years CSK have successfully blended the attacking skills of batman like Shane Watson and Suresh Raina with the excellent bowling of Doug Bollinger and Imran Tahir – you should really be advising clients along similar lines with their investment portfolios.
The performance of different asset classes, as with cricketers, will naturally vary over time and, as each asset has its own unique characteristics, wider market conditions and world events will affect them differently. Holding a diverse range of assets in line with financial goals and risk tolerance will help minimize the impact of a single asset class on your client’s portfolio and will help take advantage of opportunities across the market.
Investing and IPL season 12 – Challo!
As an IPL fan and NRI adviser you should be helping your clients to think about blending different asset classes together, making sure they are globally diversified – like the best IPL team. And like the great man himself, MS Dhoni, you need to reassess your client’s portfolio every so often and think about if it is still working together as a team.
Remember, it’s all about allowing your client’s portfolio to be firing on at least some cylinders, from season to season – no matter what is going on in the world. It’s not about which team will come out on top on 12 May 2019, but how they got there.