Here are some regulatory notes before we get started. Solimar Fund is a Rule 506(c) of Regulation D fund and only available to verified accredited investors. All fund returns are net of fees and expenses, unaudited, as reported by NAV Fund Services. Individual results may vary. Past performance is not necessarily indicative of future results.
The Scorecard.
Solimar Fund returned -5.3% in July after fees. The SPY closed the month flat at 0.0%.
Waiting for the wind
There are stretches in investing when everything seems to be happening, and stretches when it feels like you are simply waiting for the wind to return.
July felt more like the latter. We had a down month when the SPY was flat.
After a strong second quarter of the year, giving back some ground and watching the benchmark move ahead is frustrating. There is no reason to dress it up as anything else - but it is also part of the deal.
*There is no guarantee such results will be achieved and individual results will vary based on entry point and length of investment.
The Doldrums
Sailors use the term "doldrums" for the equatorial region where the prevailing winds can disappear, sometimes leaving ships sitting nearly motionless for days or weeks.
Markets can have their own version.
Our algorithms are built to capitalize on patterns in market behavior, primarily momentum and mean reversion, while dynamically adjusting exposure as conditions change. Some environments produce strong, persistent signals. Others are noisier, less directional, and simply less productive.
Inflationary periods, like we are in now, can be particularly good at changing the prevailing winds, disrupting established market patterns and shifting the environment in which both momentum and mean reversion operate. Lately, we have been navigating more of those shifting winds.
The important thing is that the investment process doesn't change because of it.
Solimar is 100% quantitative and algorithmic. There is no portfolio manager deciding that July was disappointing and changing course. There is no investment committee debating whether we should become more aggressive in August. Every trade and every adjustment in exposure continues to be determined by the system.
A down -5.3% month certainly doesn't feel like the doldrums when you're living through it. But while the experience may be uncomfortable, the process remains unemotional.
That is precisely the point.
Looking Ahead. You Can't Manufacture Wind
One of the great temptations in investing is to respond to an unsatisfying period by doing something. Change the strategy. Increase the risk. Chase what is working. Try to make back what was lost.
A sailor sitting without wind can't create it by pulling harder on the sails. Similarly, a systematic investment strategy can't force the market to produce the conditions it was designed to exploit. What it can do is remain positioned to respond when those conditions return.
That is where we are today.
The algorithms continue to run. The signals continue to be followed. Risk continues to be adjusted systematically. Eventually, the wind changes and we get moving again. As we experienced in April and May this year, sometimes we pick up steam quickly.
That’s the magic of systematic trading and trusting the process that’s performed so well since October 2023.
Lifetime Performance Comparison: Solimar Fund vs. SPY
Solimar Fund Net Lifetime Performance (10/1/23-7/31/26): 75.0% after fees.
SPY Performance (10/1/23-6/30/26): 74.7%
The SPY is presented solely as a broad equity market reference. The Fund does not attempt to replicate the SPY, and its strategy and risks differ materially.
*Benchmark comparisons are provided solely for informational purposes, are not indicators of suitability as an investment, and do not represent a guarantee of future or similar results. Fund figures and returns represent actual returns net of fees and expenses, as reported by our third-party administrator, NAV Fund Services. Individual investor performance may vary due to factors such as investment timing and specific fee arrangements. These figures are for illustrative purposes only and do not represent a guarantee of future performance. Returns are unaudited and reflect the fund’s actual trading results net of fees. Past performance is not indicative of future results. Investing in the Fund involves risk, including the potential loss of principal. Participation is limited to verified accredited investors under Rule 506(c) of Regulation D, and all investors must provide supporting documentation to establish accredited status.Please see the Memorandum for full terms and risk disclosures.
DISCLAIMER
Solimar Fund is a private fund operating under Rule 506(c) of Regulation D, which allows us to engage in general solicitation and advertising to raise an unlimited amount of capital from accredited investors, provided we take reasonable steps to verify their accredited investor status. This fund is exclusively available for investment by accredited investors, as defined by applicable securities laws
This material does not constitute an offer or the solicitation of an offer to purchase an interest in Solimar Fund, LP (the “Fund”), which such offer will only be made via a confidential private placement memorandum. An investment in the Fund is speculative and is subject to a risk of loss, including a risk of loss of principal. There is no secondary market for interests in the Fund and none is expected to develop. No assurance can be given that the Fund will achieve its objective or that an investor will receive a return of all or part of its investment. All statements herein are qualified in their entirety by reference to the Memorandum, and to the extent that this document contradicts the Memorandum, the Memorandum shall govern in all respects.
The hypothetical backtest results presented herein are for illustrative purposes only and do not represent actual trading or future performance. Past performance, whether actual or simulated, is not indicative of future results. The backtest is based on historical data and assumptions that may not be accurate or complete. Investors should not rely solely on this information when making investment decisions and should consult with financial advisors to understand all risks associated with investing in our hedge fund.
Information provided reflects 2by2 Capital’s views as of the date of this document. Such views are subject to change at any point without notice. The information contained herein is for informational purposes only and should not be considered a recommendation to buy or sell any securities. Nothing presented herein is or is intended to constitute investment advice, and no investment decision should be made based on any information provided herein. There is a risk of loss from an investment in securities, including the risk of loss of principal. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for a particular investor’s financial situation or risk tolerance. Asset allocation and portfolio diversification cannot assure or guarantee better performance and cannot eliminate the risk of investment losses. Past performance is not necessarily indicative of future performance. There can be no assurance that the performance achieved above will be achieved at any time in the future. All investments involve risk, including the loss of the entire investment.
