Austral Capital's Equity Fund gained +0.74% in January, building on solid returns in late 2008 and bringing its 2009 financial year return to +3.66%.

The Fund remained heavily invested in cash for the month (46.5%), and continued only to hold or increase existing interest rate securities positions (CBA Perls 11, Macquarie Airports Tickets). The manager elected to maintain a low exposure to the market due to ongoing global volatility in the face of bank nationalisations and the threat of deflation, and regulatory uncertainty (particularly regarding the short selling ban).

The Attunga Enviro Opportunities Fund (EOF) recorded a strong positive return in January due to an increased demand for electricity during the month, up +11.12%.

Record high temperatures in Melbourne and Adelaide during January sharply increased electricity demand, with the Victorian spot contract jumping from $47.25/MWh to $75/MWh in the space of a week. The manager also noted the return of some volatility to power markets during the month.

Attunga's other fund, the Agricultural Trading Fund, was also up in January (+4.98%). There was a slight recovery in agricultural commodity prices from lows in early December, with the fund benefitting from cross commodity and volatility spreads.

The Wingate Global Equity Income Fund was down -0.62% in December and -18.70% in 2008, despite a healthy +20% return in realised income from the fund's investment process.

Share price declines were the main factor contributing to the negative 2008 return, with unprecedented drops in equity prices hurting the fund particularly in the last quarter of the year. During the December quarter the fund continued to decrease its cash position in favour of a higher equity exposure, with the heaviest weighting in the oil and gas industry (approximately 25% of the fund's assets), a sector which suffered from a drop in the demand for oil and lower investment in new production in 2008.

Given the uncertain outlook for world economies in 2009, the fund will continue with a company specific focus, rather than position itself for a general recovery in consumer or financial conditions.

The AMP Capital Total Return Fund returned -6.50% in December, capping off a disappointing year for the fund (down -33.17% after fees).

During December the fund brought its leverage back to around 1.2x, as per its stated goals for the last quarter of 2008, negatively impacting performance. Although painful, the manager believes this will enable the fund to better exploit future opportunities. Negative performance in the energy and materials sector also contributed to the December result, although the fund did see positive returns from many of its equity and relative value strategies. Ongoing volatility and lack of demand and liquidity in credit markets remained the salient factors in market conditions.

Tibra Capital's Market Neutal Fund was down -0.51% in December, however was up +4.86% overall in 2008.

The minor fall in Australian equity markets in December (the S&P/ASX200 was down 13 points, from 3672 to 3659) saw small movements in stock prices in all sectors the fund was invested in. Following the lifting of the blanket short selling ban in November the fund recommenced shorting individual stocks, in lieu of of a short index position. Long positions on materials and short positions in industrial stocks were key drivers of the December result.

The Tibra Capital Market Neutral Fund adopts a quantitative market netural investment strategy, identifying relative price opportunities in major equity markets.

Antipodean Capital Management's Global Volatility Arbitrage Strategy ended 2008 with a return of +3.22% in December and +17.34% YTD.

The strategy, which uses a stochastic volatility model to identify investment opportunities from a basket of equity and FX assets, attributed the positive December result to buying Equity S&P500 (VIX) put options.

Antipodean's other absolute return funds, the Diversified CTA Strategy and the A$ Currency Strategy (3x), returned +2.03% and -0.04% respectively in December.

TechInvest's Intercept Capital Fund reported a gain of +0.76% in December (+12.0% in 2008), outperforming the its benchmark (the UBS Australia Bank Bill Index) which returned +0.45% over the same period (+7.6% in 2008).

With markets firmer in December, positive returns were generated from both long (Accenture Ltd, MicroStrategy Inc) and short (Dell Inc) positions, as were negative returns (FTI Consulting, Apple, Satyam). December also saw the reintroduction of short sales, with 14 stocks being shorted during the month.

The Intercept Capital Fund is a long/short (market-neutral) fund that invests in global equities, diversified across up to 40 companies.

Select Asset Management's two diversified portfolios, the Select Defensive Portfolio and the Select Growth Portfolio, both ended 2008 deep in negative territory due mainly to poor fund of hedge fund (FoHF) performance.

The Select Defensive Portfolio was down -16.2%, and the Select Growth Portfolio down -26.8%, over the past 12 months. Given the weighting of FoHF's in each portfolio, and the gap between expected and actual returns, they were a significant drag on performance - the Gottex funds for example lost between -20.1% and -37.7% on average in the last quarter of 2008. In retrospect the manager believes the impact of redemptions and poor liquidity on FoHF's was underestimated. Other underperforming strategies in the last quarter of 2008 were property, infrastructure and long and long biased equities.

The portfolios did generate positive returns from other strategies, such as volatility and managed futures, as well as gold. Strong performance in December and early January indicates there are some positive signs for 2009, although markets will remain volatile.

Two of Aurora Funds Management's funds - the Aurora Buy-Write Income Trust and the Infrastructure Buy-Write Income Trust - have outperformed their respective benchmarks in 2008, and go into 2009 ready to take advantage of the emerging opportunities in global markets.

The Buy-Write Income Trust, which returned +1.20% in December but was down -8.19% in the six months since July, outperformed the S&P/ASX200 Accumulation Index and the ASX All Ordinaries Accumulation Index by +18.64% and +21.54% respectively in the six month since July 2008. The fund remained heavily invested in cash in December, and is positioned to invest in compelling investment opportunities as they arise.

The Infrastructure Buy-Write Income Trust returned +0.60% in December but was down -1.90% since inception (December 2007), compared to the UBS Global 50/50 Infrastructure and Utility Index which returned -32.7% in the same period. The manager reported that the fund ended 2008 with most of its capital preserved, with investments in electric, gas and water utilities the key drivers of performance. This has placed the fund in a good position to take advantage of attractive investment opportunities.

Tactical Global Management Group's (TGA) GTAA Fund reported a gain of +1.30% (AUD share class) and +1.81% (USD share class) in December. The 2008 return for the fund was +0.91% (AUD) and-2.74% (USD).

Although the fund did not take any positions at a broad asset class level during December, individual strategies produced positive results. The fund's equity module benefited from the Japanese market's outperformance (up +3.8%) and short exposure to US equities, while the fixed interest module produced gains due to long US and short Japanese fixed interest exposure (partially offset by losses in short exposure to Australian fixed interest).

Going into 2009 the manager believes opportunities may present themselves in equity and fixed interest markets, due to overvalution or misprising of securities and excessive pessimism.