Australian Fund Monitors has just released the November Absolute Return and Hedge Fund Review. Australian absolute return and hedge funds, like their overseas counterparts, enjoyed one of their best performances on record in 2009. Single funds across all strategies returned 20.81% for their investors after all fees as equity markets rebounded sharply from the selloff of 2008 and early 2009.

We also cover the performance of three Model Portfolio's which highlight some of the best funds in our database.  Each of these portfolios has a three year annualised performance of over 17% with a volatility of less than 6%, and begs the question "why is there still a reluctance to increase research, allocations and investments to managers such as these?".

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

ATTACHED FILES2009 absolute return and hedge fund review (pdf format)

Australia's Reserve Bank defied the market's and most economists' predictions by leaving official interest rates on hold (at 3.75%) at today's monthly RBA board meeting.

The widely held view was that the RBA would increase rates for the fourth time in as many meetings (the RBA board meets on the first Tuesday of each month with the exception of January). However, had they done so, it would have been unprecedented for them to move rates upwards at four successive meetings.

In the Bank's statement RBA Governor Glenn Stevens noted the unexpected strength of the local economy compared with conditions just 12 months ago, but against this cited the removal of the government's fiscal stimulus, and the fact that banks have already increased rates to borrowers by almost 1% more than the 0.75% increase in official rates since October 2009.

However, the final paragraph of the Bank's statement was clear in pointing out that rates remained lower than historical averages, and that if economic conditions continue to evolve as expected, monetary policy will need to be adjusted further to ensure inflation remains consistent with the target over the medium term.

In other words, borrowers can probably only breathe more easily for a month or two at the most.