To say the least, December was a disappointing month for Arcanum Capital Management’s real-estate investment trust vehicle. The Arcanum REIT Investment Fund lost an estimated 18.9% on the month, erasing all the gains it made in November. Still, the fund ended its first 10 months of trading up 21.8%.

Firm founder Henrik Laulund said last month’s loss was mainly due to a retracement in some of the fund’s short positions that produced big gains in November, creating a spike in its performance that did not hold for very long.

“While the overall REIT market gained 16.4%, several REITs had price changes of more than 100% during the month,” he wrote in a letter to investors. “So is our investment model broken? We don’t believe so. But the current market environment has created a situation that is new to the REIT market and requires some adjustments to our strategy.”

Lauland said he believes that the current volatility and risk have become too high so the fund will lower its overall market exposure to accommodate the increase in volatility and reduce its risk “until the market returns to more normal conditions.”