It hasn’t been a good summer for Godvig Capital’s Iraq-focused hedge fund to say the least. The Babylon Fund, like most of its peers around the world, continued to lose money in August, dropping 2.6%. The fund fell 2.8% in July and 0.6% in June.

Portfolio manager Björn Englund pointed to the influence of Iraq-dependant securities listed outside the war-torn country, rather than the fund’s direct holdings in Iraq, as culprits for the fund’s drawdown.

“We saw setbacks for oil companies on the back of lower oil prices, coupled with a rise in general international risk-aversion,” Englund wrote in an investor letter. “Further, negative sentiment is still reigning over the MENA markets, which are now moving with the investors’ psychology, more than on the basis of economic fundamentals. We are consistently increasing the fund’s exposure to undervalued holdings on the Iraqi Stock Exchange. However, liquidity on the ISX has dropped considerably during the summer, owing both to the summer silence and upcoming period of Ramadan.”