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First Quarter Markets Review

Domestic equity markets rose in March following on their strong rebound in February. The S&P 500 Index finished the month with a gain of +0.8 percent and a +1.8 percent increase for the quarter. The Dow Jones Industrial Average was also up in March, rising +0.9%, but lost -0.2% for the quarter. The technology-laden NASDAQ OTC Composite fell -2.5% in March, but gained +0.5% in the quarter. Large capitalization stocks outperformed their small capitalization counterparts in March and the quarter. Value stocks outperformed growth stocks across all capitalization sizes.

Europe dominated international equity markets in the quarter. The top five performing countries were Greece, Portugal, Italy, Denmark and Indonesia. Calculated in U.S. dollar terms, the U.S. ranked 17th out of 33 countries for the quarter.

Taxable fixed income markets declined modestly by -0.2% for March, but gained +1.8% for the quarter. Municipal bonds fared better gained +0.2% in March and +3.3% for the quarter.

Longer-maturity U.S. Treasury yields fell during the first quarter, while shorter maturities were generally unchanged to modestly higher, causing the yield curve to flatten. Pressure in developing markets drove a flight-to-quality early in the quarter, benefitting all U.S. dollar-denominated assets. But late in the quarter, Federal Reserve Chair Janet Yellen’s statements caused markets to pull forward the timing of the anticipated first increase in federal funds rate, which send bond yields higher – particularly at the short end of the curve. All taxable sectors posted positive total returns during the quarter, with a majority of the performance being generated in January, when rates fell the most. The corporate sector provided the best returns, primarily due to its longer duration and spread tightening, as investors continued to search for yield.

2013 Year-End Distribution Amounts

Sit Mutual Funds distributed 2013 net realized capital gains and income to shareholders (of record on December 17th) on December 18, 2013. For distribution amounts for the year 2013, please view the Distribution Table.

Manage Risk With Asset Allocation

Asset allocation is a very important part of risk management within an investment portfolio. By investing in multiple asset classes, such as stocks, bonds, real estate, etc., that do not have closely correlated returns, investors can lower the variability of the returns that their portfolio experience over time. After an allocation method has been selected, periodically rebalancing the portfolio becomes an integral component to this process.

Through different allocation and diversification strategies, it may be possible to create portfolios with reduced risk (as measured by return variability) that can produce more consistent returns. For example, the S&P 500® Index, which is often used as a proxy for U.S. large cap stocks, fluctuated in annual returns from a low of -37.00% (2008) to a high of 26.47% (2009) for the five years ended December 31, 2012, while the Barclays U.S. Aggregate Bond Index, a proxy for the U.S. taxable bond market, only fluctuated between +4.22% (2012) and +7.84% (2011) over the same time period. During the calendar year of 2008, a portfolio comprised of holdings from both indices would have experienced a smaller decline than one made up entirely of the S&P 500 Index. In 2012, investing only in bonds (as defined by the Barclays U.S. Aggregate Bond Index) would have produced a positive return of 4.22%, but adding stocks to the equation would have increased the return on a portfolio for that year.

Asset Allocation

Read the full article "Manage Risk With Asset Allocations".

July 31, 2014

The Sit Mutual Funds are managed by Sit Investment Associates, Inc., which has been operating under the highest ethical and professional standards since it was founded in 1981 by Eugene C. Sit. We maintain an uncompromising commitment and adherence to our investment philosophy and style, while continually seeking ways to enhance our investment process.

Eugene Sit

Read about Sit Investment Associates & Sit Mutual Funds founder Eugene Sit.

Important Legal Information

The Sit Mutual Funds referred to in this site are offered and sold only to persons residing in the United States, and are offered by Prospectus only. By using this site you agree to our Terms of Use. Information in this site does not constitute an offer to sell, or a solicitation of an offer to buy shares of any Sit Mutual Funds. Shares of the Sit Mutual Funds will not be offered or sold to any person in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. Mutual fund investing involves risk. Loss of principal is possible. For more information on any of our Funds, download a Prospectus from this site or call 800-332-5580 to have one sent to you. The Prospectus contains important information about a fund's investment objectives, risks, and charges and expenses, and should be read carefully before investing.
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