The Global Commodities Long Only Fund posted another small gain in March, this time of +0.37%, to bring its 2009 return to +1.11%.

Metals commodities were the most significant contributor to the March result, specifically copper, platinum and zinc. Losses in heating oil and NY silver partially offset these gains.

This result follows on from an exceptional +10.47% return for the Fund in 2008, particularly for a long only fund. Although underperforming its benchmark (the RJ CRB Index) by -3.83% in March, the Fund's average monthly return since inception (+0.98%) and cumulative return (+177.32%) both markedly outperform this benchmark (+0.41% and +36.99% respectively). These figures demonstrate the absolute return focus of the Fund over the long term.

Commodity Strategies' other fund, the Long/Short Fund, lost a disappointing -2.05% in March, and is now down -0.88% for 2009. Energy commodities contributed both the largest gains and the largest losses to the portfolio for the month.

AR Capital Management's Ascot Fund produced a modest gain of +0.21% in March, significantly underperforming the market which bounced +7.1%.

The Fund has been defensively positioned for several months, and although this has resulted in the Fund outperforming the market by almost 30% since June 2008, it was this caution that caused the Fund to miss out on March's equity market rally. The Fund has gradually been increasing its exposure, currently sitting at approximately 60% with a net long bias, reflecting the manager's increased degree of comfort in investing in the market, even though the short selling ban on financials is still in place.

The main drivers of March's result were positive contributions from Woodside Petroleum, Macquarie Communications Group and Worley Parsons (all long) among others. Small negative returns in Rio Tinto, David Jones, Nufarm and Woolworths offset these gains.

The St Helens Capital (SHC) Arran Fund was up a robust +6.55% in March, bouncing back from a -0.92% loss in February.

Unsurprisingly, given the rally in equity markets in March, long positions contributed much to the Fund's overall result. Long positions in Santos, NAB and QBE among others were the top performers, Santos contributing +0.82% alone. Losses came about mainly from short positions, particularly in AXA Asia Pacific which lost -2.06%. Looking forward, the manager believes the issue of whether the current rally is sustainable or not, and the decisions resulting from it, will influence investor behaviour.

The Platinum International Health Care Fund lost -0.40% in March, while all the other Platinum funds reported gains ranging from +0.90% (International Fund) to +4.90% (Asia Fund).

These results represent a significant turnaround for Platinum, whose funds all reported losses in February. In addition, all funds outperformed the MSCI ALl Country World Index for March. Refer to the AFM Fund Selector for full details of each fund's performance.

The PM Capital Absolute Performance Fund was up +9.4% in March, while the Australian Opportunities Fund gained an impressive +14.9%. Unlike many other funds in the current climate of economic uncertainty, both funds were fully invested for the month, which boosted performance.

Strong rallies in global equity markets, specifically financial and media stocks, pushed both funds to strong performances. The Absolute Performance Fund (ARF) lost ground in currency markets, as the US dollar was sold off due to the recent financial stimulus measures adopted in the US. March also saw the adding of resources positions to the ARF's portfolio for the first time in nearly two years, triggered by recent stock price falls. For the Australian Opportunities Fund Macquarie Group, PMP and Harvey Norman were key positive contributors, offset by negative returns in Austar and Fosters.

PM Capital's other fund in the AFM database, the Enhanced Yield Fund, posted a more modest gain of +1.0% in March.

The Amazon Market Neutral Fund, managed by Regal Funds Management, posted a gain of +0.76% in March, bringing its 2009 return to +5.37%. The Regal Tasman Market Neutral Fund gained +1.07% and is now up +6.95% for 2009.

Both Fund's short positions lost 8% as equity markets rallied during March, however this was offset by gains on long positions of around 9%. Two Macquarie satellite funds (MIG and MCG), which were purchased after both suffered heavy selling, performed particularly well during the month, which the manager attributed to Macquarie's incentives to produce higher share pirces by the end of Macquarie's financial year (31st March). Although the manager sees the current rally possibly continuing into the next few months, there is still a lot of economic uncertainty in markets. As a result the Funds will continue to focus on stock specific risks as much as possible.

The MM&E Capital Investment Trust No. 1 was up +0.26% in March, following on from gains in January and February.

Successful closeouts of positions in St George Convertible Preference shares as well as a share placement in AXA Asia Pacific pushed the Fund to a positive result for March. The Fund was also able to avoid two notable failed deals during the month, OZ Minerals and Adelaide Managed Fund Asset Backed Yield Trust.

The MM&E Capital Takeover Target Fund also recorded a gain in March, up +1.83%. The Fund remained underinvested for the month, causing it to underperform the market which gained approximately 7%. Positive returns came from positions in BOQ and Santos, while the Fund also profitably closed out a position in AXA Asia Pacific. Negative returns came from Healthscope, which was closed out during the month, and Lion Nathan. The manager will look to increase the level of investment by the Fund over the next few months.

The Austral Equity Fund made a small gain in March, up +0.57%, following on from similar returns in January and February. The Fund remained defensively positioned in equities due to ongoing volatility.

The manager noted global equity markets rallied in March, up around +7% with a notable decrease in capital raisings, which had previously held back market gains. The Fund will remain defensive in equities while economic conditions remain poor and while balance sheet and liquidity disclosures remain inadequate.

The Fund did however increase its exposure to credit markets, specifically to short duration corporate credit, while maintaining existing positions in Macquarie Airports Tickets. At month end the Fund had a 37.5% exposure to interest rate securities and a 60.3% cash position.

The Attunga Agricultural Fund was up +3.73% in March, while the Enviro Opportunities Fund gained +4.51%. Attunga's offshore fund posted the strongest return, up +6.9% for the month.

Agricultural markets ended March higher, the Agricultural Fund benefiting from higher soy prices (due to tigher supply in the US as well as ongoing concerns over production in South America) in particular. Volatility spreads in corn, wheat, canola and soybean oil options also provided positive returns for the Fund.

March was characterised by significant falls in carbon affected electricity contract prices for the Enviro Opportunities Fund. With the Federal Government's Carbon Pollution Reduction Scheme (CPRS) due to be rolled out from July 2010, the electricity curve needed to factor in a carbon component however carbon prices fell dramatically during the month. Electricity contracts were slow to react to this, and this combined with the growing policital risks surrounding the CPRS and the impending start date conspired to reduce carbon-electricity spreads. The manager noted that the CPRS may cause an increase of approximately 85% of the cost of a tonne of carbon. They also noted that with plenty of debate ahead for the CPRS there will be many trading opportunities for the Fund.

As equity markets around the globe continued to be buffeted in February, Australia’s Absolute Return and Hedge Fund industry slipped into the red, collectively losing 1.6% for the month, and erasing January’s gains to be down 1.21% for the year to date, based on 78% of local funds returns.

Against this the S&P 500 index in America lost 10.99% in February to bring year-to-date losses to minus 18.62%, while on the local front the ASX 200 lost 5.54% to show a cumulative decline in the first two months of 2009 of 10.15%.

When put in perspective, 48% of the over 200 funds listed in Australian Fund Monitors index of hedge funds have produced a positive return in the first two months of 2009, with 84% of all funds outperforming the ASX 200.

The results, whilst not universally positive, again showed that in times of adversity hedge funds, far from being the speculative vehicles that they are frequently portrayed as, provided diversity and significantly better risk profiles than equities alone.

For detailed analysis of performance for each strategy, industry comment and ranking tables, please open the attached .pdf file.

ATTACHED FILESAFM February performance review (pdf format)