Humans are, by their very nature, flawed. Our brains are subject to cognitive biases which affect our ability to process information. We have good days. We have bad days. What we lack is consistent days.
Computers are not subjected to cogitative biases. They process information and apply rules in a consistent and repeatable manner. They can process enormous amounts of information in a very short period of time. They lack emotion and have no regard for external influences.
Managers using a systematic approach are often criticised for using opaque “black box” systems. At Zen we believe this criticism is ludicrous. There are aspects of our approach which we keep confidential to ensure our Intellectual Property is protected. However, we are happy to explain our overall approach to potential investors. Our approach does not change, unlike those humans we compete against.
The challenge is in programming a system so as to consistently delivers attractive risk-adjusted returns. This task is extremely difficult and complex. The process of developing, testing and programming Zen’s system has taken over a decade.
Why Long/Short Equity?
The concept of Long/Short Equity dates back to 1949 when Alfred Winslow Jones established the world’s first Hedge Fund. At various points through the cycle Zen moves between 50% Net Long, Market Neutral and 50% Net Short. As such, our returns are generated through a combination of market risk (beta) plus both market-timing and stock-picking (alpha). The Long/Short Equity approach seeks to identify and exploit inefficiencies between and within various equity stocks and sectors. Our apprach inheriently has a low correlation with the major equity indices. Thus the Zen Capital Management Global Fund SP offers investors true portfolio diversification.