As an Englishman working in Australia, I’ve discovered over the years that ‘Oz’ holds a multitude of attractions for Poms. But an Ashes series most certainly isn’t one of them.
By any standard, England’s recent mauling at the hands of their arch-rivals ranked as a sporting humiliation. It has since been touted as the death knell for ‘Bazball’, the controversial playing style first brought to the Test cricket arena in 2022.
With the gibes still coming at me from all directions weeks after the capitulation, I think it’s worth reflecting on Bazball’s rise and fall – not in a bid to at last silence the goading of my Aussie colleagues but because I believe it may offer a valuable lesson for investors. Let me quickly try to explain.
The fundamental idea behind Bazball is to drive contests towards decisive outcomes through ‘positive’ cricket. Ideally, this would result in more victories for its practitioners.
Yet exactly how do you promote positive cricket? A layperson might guess the most obvious ploy is to throw the bat at just about everything – and history rather suggests the layperson would be right.
All-out attack has occasionally served England well but it has also been responsible for several lows. The Ashes surrender was arguably the lowest of all, with Australia’s press corps celebrating Bazball’s demise long before the series reached its merciful end.
The world’s oldest surviving former Test cricketer, Neil Harvey, a member of Australia’s ‘Invincibles’ in 1948, probably summed it up best.
“It might work against ordinary teams,” he said of England’s hit-and-miss ethos, “but when you get a class side it’s a different ballgame.”
Is there an investment equivalent of throwing your bat at everything? Maybe. If you invest in a passive fund, for instance, you’re essentially taking a swing at all and sundry.
Granted, the risk levels aren’t as elevated as those in Bazball. You’re unlikely to toss away an entire series because of a handful of ill-conceived slashes. The overwhelming likelihood is that your successes will ultimately outweigh your failures.
Even so, there’s surely something to be said for an approach that genuinely aims to eliminate missteps rather than accepting they’re part and parcel of how the game is played. This brings us to active fund management and direct engagement.
The sphere of global equities is home to thousands of companies. The under-researched arena in which my colleagues and I specialise, small-caps, is comprised of almost 4,000. Inevitably, they represent something of a mixed bunch.
All things considered, relatively few are analogous to a majestic straight six that sails over the boundary, clears the pavilion and lands somewhere in the car park. Those that call to mind a solid, reliable, straight-bat defensive block are also less numerous than commonly supposed.
Many are instead more akin to England wicket-keeper Jamie Smith’s haphazard waft at the SCG – a shot described by one newspaper as the “anatomy of an Ashes brain-fade” .
They have their place, not least in an index, but you wouldn’t necessarily want to put a chunk of your mortgage on them.
So how can the good be separated from the bad? Unlike Bazball at its scattergun worst, it’s a question of precision – a matter of weighing up the options, being selective and truly striving to avoid suboptimal decisions.
For our fund, which has a global remit, we aim to do this through a blend of quantitative and qualitative analysis. We begin by assessing sectors and regions and then gradually whittle down the opportunity set until we’re left with what we regard as high-quality businesses with a capacity for growth.
Like England, we want to rack up as many victories as possible. Specifically, rather than merely being the market – which is basically the stuff of passive investing – we want to beat the market. But we want to do it without hurling caution to the wind.
Perhaps the other cricketing parallel that’s relevant here is the difference between a Test match and a dedicated thrash-fest. Many of the tenets of Bazball were forged amid the thrills and spills of the sport’s more frantic iterations – one-day games, Twenty20 clashes and other limited-over encounters.
Five-day Tests may be less circumspect than they used to be – I’m thinking of you, Geoffrey Boycott – but they still tend to require subtle shifts in tactics. Australia’s Ashes supremacy stemmed from periods of both aggression and resistance, a sense of ‘feel’, a bent for patience and an underlying notion of the bigger picture.
Much the same qualities can underpin successful investment. Like Tests, global equity investing demands a longer-term view.
You can take a wild swipe at everything if you really fancy. You might even prosper over the short term. But the chances are that, in the end, like my hapless countrymen, you may find yourself stumped.
Tobias Bucks is co-manager of the Marlborough Global SmallCap fund. The views expressed above should not be taken as investment advice.