Zeus

Overview of Zeus

Zeus Asset management is a fund management firm founded by Tim Landon and Jerry Schneider in 1968. Due to ERISA (employee retirement act) deregulation, Zeus had become an independent, employee-owned, money management firm that provided service to both institutional and individual investors. The firm’s investment philosophy was based on the belief that superior investment results could be achieved over many years by following a conservative, risk-averse, quality-oriented approach to investment management. Zeus had two main advantages compare to its competitors. First of all, Zeus’s portfolio management group were more skilled and experienced than its competitors. More than 75% of its investment professionals were CFAs and had received their MBAs from top business schools. The experience of its employee also reflected in the average age of the portfolio managers. The average age of investment professionals at Zeus was 44 which is older than most of its competitors, this indicates that most of its portfolio managers are at later stage of their life cycle. This might be one of the reasons of Zeus's relative risk adverse strategy. In addition, Instead of focusing on high return by doing tactical trading in short term, Zeus believed that risk minimization and long term investment can actually give investor better investment result. This can be seen by their strategic asset allocation which focuses on long term investment.

Performance Measure System of Zeus

1. Risk-Adjusted Return Vs Relative Return

It is clear that Zeus should implement a risk-adjusted performance measure framework. The most basic economic rationale behind this is the Modern Portfolio Theory which suggests that portfolios should be mean-variance efficient i.e. managers should maximise portfolio expected return for a given amount of portfolio risk, or equivalently minimize risk for a given level of expected return. Another reason why Zeus should choose the risk-adjusted return...