SBMNF Fund Posts Loss For July Though Up On Year

by Carla Johnson, Investors Offshore.com

18 August 2003

The Santa Barbara Market Neutral Fund (SBMNF) reported a decline in its portfolio in July of 2.45% though the 12 month performance remains solid at 6.08% and annualized returns since the fund's creation sit at 19.14% net of fees.

In its monthly investor newsletter, SBMNF noted a significant differential in the performances of the NASDAQ and the S&P 500 during July, with the former returning 6.92% against the S&P's performance of 1.76%.

The most remarkable moves last month were witnessed in the US government bond markets, SBNMF observed, where long term interest rates rose sharply in July. For example, the newsletter explains that rates on the US 10 year T-Bond increased from 3.35% to 4.47% which caused a corresponding fall in the price of the bond of 9% for the month.

As SBNMF points out, this means that an investment in a government bond that would be expected derive an annualized return of 3.53% has actually fallen in value by as much as 12.8% over the space of the last six weeks.

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