Case Study of Zeus

This case study aim to analysis the performance measurement of the Zeus, and find out the appropriate way to measures the performance of Zeus investment and point why the way is suitable for the Zeus.

Then estimate some ratios of Zeus and their competitor to compare the performance of each Investment. Backgrounds of Zeus Zeus asset Management was an asset Management Company founded in 1968 in Atlanta.

The firm becomes to an independent, employee-owned, money-management firm that serviced both of institutional and individual investors due to response to he employee retirement income act’s (ARISE) deregulation. The Zeus believes that the long term Investment with a conservative, risk-averse, quality-oriented approach to Investment management can bring an excellent outcome Investment. How Zeus differ with their competitors The Zeus is well known for its unique firm’s investment strategy, customer service, and teamwork style.

The investment strategy of Zeus is more focus on the long-term investment, rather than frequently short-term investment compared to their competitors. The using of strategic asset allocation which focuses on long period how’s, that the Zeus believes the long term Investment and risk reduce can provide a better return to Investors compared to the focus on short period. Moreover, the commitment to relationship-oriented client service of Zeus provide in person or by phone service to every individual with managing and administering account at the firm to discuss issues with clients.

The Zeus staffs aims to coincide the requirement of their clients’ objective and Judiciously managing their portfolios. For the high net- worth clients, Zeus specialized In building portfolios for the client with specific heartsickness regard to taxes, liquidity, legal restrictions, and telling of distributions, diversification. Investment horizon and others.

Furthermore, the consisted of teamwork of Zeus is also differ from their competitors. Majority of its investment professionals were SFA and achieved high business degree.

The high performance of teamwork comprising analysts and portfolio managers give the investors high confidence of portfolio decisions. Additionally, the average age of investment professionals In Zeus was 44, who had an average of 1 8 years of Investment experience. Compared to their mall competitor Fidelity, the average age of Zeus’ professionals is extremely higher than Fidelity’s managers which were 26.

The average work experience of Zeus’ employees at 18 years is also higher than Fidelity at 5 years.

Measurement of performance Absolute return is a way to measuring the portfolio performance by measure the return that a portfolio achieved during a certain period of time or present value of future estimated expected return , which looks at whether the Investment making a appreciation or percolation over a given pergola AT time . Nine relative return assuring the investment performance by the difference between the holding period returns and the benchmark such as S;P 500. It is looks at whether the investment outperforms or underperformed the benchmark of market performance.

The absolute return differs from relative return by the absolute return is concerned with the return of a particular portfolio and does not compare it to benchmark.

However, both of absolute return and relative return may not reveal the entire truth about performance of the portfolio. This is because that both of those measurements do not considering the risk of portfolio. For example, a portfolio with high absolute return and relative return may come with high risk, and the high risk may not suitable for risk-averse investors.

The risk-adjusted return is another way to measure the portfolio performance. It measures the investment’s performance by measuring how much risk is involved in producing that return.

The risk-adjusted return can be measured by shape ratio, Trenton ratio, Sense’s alpha and information ratio. The shape ratio considers total risk of portfolio by measures the excess returns generated by a portfolio above the risk free rate in relation to return. The higher shape ratio implies a higher risk-adjusted return. The shape ratio is appropriate for the portfolio with the entire risky investment.

The main advantages are the sharp ratio is easy to calculate, and the Sharpe ratio can compared with other types of risk measures. This is because the shape ratio not referring to an outside reference point as the basis for that particular investment, which making it Just as applicable to individual securities as it is for portfolios and mutual funds.

However, Sharpe ratio does not capture the real world as it based on the normal distribution to determine the tankard deviation. Moreover, shape ratio treats all volatility in same, which may mislead the investors.

Trenton ratio considers systematic risk of a portfolio by measures return to diversified return, which is differs from the Sharpe ratio by it is instead of using volatility in the denominator. The advantage of Trenton measure is it weighs excess returns against systematic risk. Sense’s Alpha expresses average return on a portfolio over the return predicted by CAMP.

If a portfolio is a one of many combined into a larger investment fins, the Sense’s alpha or the Trenton ratio re appropriate to measures the performance of those portfolio.

Information ratio measures the portfolios return above the returns of benchmark to the volatility of those return, it can be calculated by divides the alpha of the portfolio by the unsystematic risk which can eliminated by diversification. For Zeus, the risk- adjusted return may more appreciate to present their investment performance compared to absolute return and relative return due to their investment philosophy. The Zeus believed that the better return can be achieved by follow the conservative, sis-averse, quality-oriented approach to investment management over a long period.

The absolute return and relative return does not considering the risk for the return.

As a result, the risk-ad]quested is a better way for measure the performance by measuring how much risk is involved in producing that return of each portfolio. Additionally, the risk-adjusted return is more comparable for the portfolio. This measurement can be compared with other types of risk measures between Zeus and their competitors. Performance measures for each of Zeus mutual funds The Zeus mutual funds of included an equity fund, a bond fund, a mutilate bond, n International equity Tuna, a Lance Tuna, Ana a snort-term Dona Tuna.

I nee orator of each portfolio performance can be seen in table 1. For equity fund, it seeks long- term growth of capital through investment in a high-quality portfolio of securities.

The shape ratio of Zeus is higher then S;P 500 for whole period, which means the risk of investment in equity funds of Zeus is lower than market index. The trainer ratio of Zeus is lower than the Index (0. 786) at first superior at 0. 5070, but at the second period, the trainer ratio has a shapely increase as well as the Index. That means the equity fund is less diversified.

Moreover, both the Sense’s alpha and information ratio is negative, that means it underperformed.

For bond fund, it sought to maximize total return through current income and capital appreciation. The both of shape ratio and resort ratio of Zeus are less then the Lehman Brothers Aggregate Index. That means the portfolio is not well diversified. Moreover, the Sense’s alpha and information ratio are negative for whole period, but it has a significant increase at second superior compared to first superior. It is shoes the performance of Zeus has an improvement.

For the balance fund, it seeks to minimize risk simultaneously to generate competitive return over long period.

From the table 1, it shows that the performed seem better in the second superior than first superior. Shape ratio and tremor ratio shows it performed better than index. For the international fund, it also shows that the performed seem better in the second superior than first superior. All of the measure shows the performance of international fund has a good performance compared to MASC.’ Index.

In conclusion, risk-ad]quested return is appropriate to measure the investment performance of Zeus.