‘Nowhere To Hide’ For Babylon Fund In Nov.

Jan 8 2008 | 12:04pm ET

Godvig Capital’s Iraq-focused hedge fund, the Babylon Fund, experienced its biggest monthly drawdown since inception, losing 5.4% in November. The drawdown slowed the US$13.1 million fund’s year-to-date returns to 13.6%.

In his monthly investor letter, portfolio manager Björn Englund partially attributed the loss to “the general spike in risk aversion globally and in the region in November, which was combined with ‘lack-of-liquidity-driven’ falling share prices on the Iraq Stock Exchange and higher yields, while the ongoing appreciation of the Iraqi dinar stalled–at least temporarily.”

The open-ended mutual fund structured vehicle’s largest losses during the month were in a few Iraqi financial services names such as Dar ElSalam Investment Bank and Kurdistan International Bank, which both lost a 25% of their value in November.

Going forward, Englund said he expects the hiccup in the Iraqi equities market to subside and the prevailing improved security and macroeconomic situation in Iraq to help “breath new life into the stock market and investors' sentiment in 2008.”

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