Fourth of July Holiday

In observance of Independence Day, the Sit Mutual Funds offices will be closed on Friday, July 3rd. Due to the close of the New York Stock Exchange on July 3rd, transactions received after 3 p.m. Central Time on July 2nd, will be processed on July 6th. Sit Investor Services Representatives will resume taking calls on Monday, July 6th at 7:30 a.m., Central Time.

May 2009 Financial
Markets in Review

The stock market rally that began at the beginning of March has continued. May was another strong month for global equities. The MSCI World Index rose over +9 percent, and large capitalization growth stocks slightly lagged their value counterparts during the month. Longer duration and lower rated bonds outperformed during the month as bond liquidity continued to improve.

With respect to equity strategy, we have begun to shift toward more cyclical companies that will benefit from an improving economy. Stock markets appear to be anticipating the end of the recession. As is characteristic of any period when the economy is in transition, conflicting data will cause volatility in financial markets. We will continue to use this volatility as an opportunity to shift portfolios toward more economically sensitive companies. Sit Mutual Funds’ domestic equity portfolios continue to maintain their emphasis on the traditional growth sectors of healthcare and technology, supported by the evolutionary portfolio changes just described.

Bond market liquidity continued to improve during May as investors continued to shift money out of lower-yielding money market funds and U.S. Treasury notes back into riskier asset categories, including corporate and municipal bonds. The municipal yield curve flattened during the month as investors continued to seek out the attractive yields available in longer duration and lower rated municipal bonds. We expect this trend to continue over the remainder of the year, albeit at a slower pace than the past five months, resulting in further price appreciation for municipal securities. 

Mutual Funds Operations More Transparent Than Hedge Funds

Investors are concerned these days about more than market performance. Tragic stories of portfolios damaged by investments in unethical hedge funds engaged in activities ranging from deceptive accounting to embezzlement are grabbing headlines. The vast majority of hedge funds are reputable and their clients need not worry, but for investors who prefer greater transparency in their investments, mutual funds may be the answer.

Mutual funds and hedge funds both pool investors’ money to be managed as a single portfolio, but there are significant differences between the two when it comes to features such as liquidity, reporting and investment constraints. Both investment vehicles have their place in the investment industry, but when headlines are filled with stories of Ponzi schemes, mutual fund shareholders can find an extra level of comfort in the required liquidity and transparency employed in their portfolios' administration.

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