Regal Funds Management's Amazon and Tasman funds have returned 4.97% and 4% respectively for July, bringing 2009 YTD performance to 15.97% and 19.94%.

The manager noted that the highlight for the month was the financial sector which contributed strongly, largely through strong bounces in three recently capitalised property trusts, in addition to long positions in the banks. Coal seam gas stocks in the energy sector also contributed positively, whilst on the short side domestic cyclicals suffered as the Australian economy proved to be more resilient than anticipated.

Tasman: 1 year return: -2.88%. Annual: (May 2007) +16.17%
Amazon: 1 year return: +0.29%. Annual: Sept 2005) +21.44%

Both the Amazon and Tasman funds are market neutral, with the Amazon fund based in the Cayman Islands and the Tasman fund domiciled in Australia. Both funds are predominantly invested in Australia, with limited exposure to European stocks.

PM Capital's Absolute Performance Fund continues to benefit from equity market rally with a 10.9% return for July.

The manager reported that fund performance in July was assisted by better than expected results in the US, in particular in the banking and technology sectors. Credit securities purchased throughout the first half of the year contributed to performance as credit markets continued to ease. The fund remains fully invested as the manager believes their stock holdings represent good value on a two to three year horizon.

1 year return: -5.9%

PM Capital's Global Equity fund is a focused non indexed portfolio, typically consisting of between 35 to 45 stocks and under normal circumstances is between 80% and 120% invested, although if appropriate the fund may be 100% invested in cash.

Absolute Return Capital Management's Australian equity long short Ascot Fund reported a positive result for July, returning 6.6% net of fees, to produce their best ever return over the four years since the fund's inception in August 2005.

July's gain of 6.6% has brought the 2009 YTD result for the Ascot Fund to 12.37% following their positive return in calendar 2008 of 5.24%, and an annualised return since inception of 14.33% with volatility of just 5.56%.

Commenting on the result, Managing Director Craig Connelly noted not only the record result and a pleasing start to the new financial year, but the fact that the performance was based on an average net long position of only 57% of funds under management (beta adjusted), attributing the performance to a combination of strong stock selection as well as the effective use of call options to provide leverage.

Looking forward the manager is bullish, noting that the ASX's strong bounce off the March low was from a market that had overshot to the downside, and intends to retain a net long bias while remaining vigilant to lock in trading profits while continuing to manage their positions in a pro-active manner.

June saw a continuation of positive results for the Australian absolute return and hedge fund sector, largely on the back of an ongoing rally in equities, particularly the ASX 200. Although AFM's index was positive, outperforming the S&P 500 and the MSCI World ex Australia index, it underperformed the ASX 200 which rallied 3.59% as confidence continued to flow back into investors.

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

ATTACHED FILESJuly 2009 absolute return and hedge fund review (pdf format)

Foreign exchange specialist Excalibur Funds Management completed its three year track record in June. The Absolute Return Fund which uses a combined systematic and discretionary investment process has an annualised return of 19.7%.

The manager makes extensive use of options to protect downside risk. "It's been a tough environment in currencies over the past 12 months, we've really had to focus on managing the risks for investors," commented Excalibur principal Matthew Harper. The Fund has a three year risk adjusted return (Sharpe ratio) of 1.37.

Excalibur received strong inflows during the month with assets under management topping AUD$100mn. A further AUD$40mn of capacity has been locked in by a Hong Kong based Fund of Fund. The manager plans a hard close at AUD$300mn.

In what must be approaching a record both in Australia and overseas, Fortitude's local fund has continued its low volatility approach to risk and returns without a negative month since December 2007. In 2008 Fortitude returned investors 12.29% and has now returned an annualised 11.54% since inception in March 2005 with a standard deviation (volatility) of 2.97%.

1 year return: +11.96%. Annual (Mar.2005): +11.54%

Attention to risk has seen Fortitude produce 94% positive months and a maximum drawdown of just -0.50%.

The manager noted another relatively quiet and choppy month for all asset classes, making some gains on their long volatility positions and realisation of their REIT holdings. They also noted that volatility levels have fallen to levels where risk and rewards are tipped in favour of their long volatility strategy.

1 year return: -11.79%. Annual (Mar.2007): +2.31%

Shell Cove was established by Richard Jenkins in 2004 following a 20 year career with Macquarie Bank.

The Ascot fund produced a positive return in 2008 of +5.24% and has now produced an annualised return of +12.80% since inception in August 2005. The fund, which has recently received a new mandate of $10m from an Australian family office to take its FUM to over $60m, uses a combination of fundamental research, with technical overlays and long volatility options for timing and risk implementation, to invest in Australian equities.

1 year return: +2.3%. Annual (Aug.2005): +12.8%

ARCM is managed by Craig Connolly, with Tony Cooper and Peter Lucas from Melbourne and boasts an enviable risk record with 72% positive months and a maximum drawdown of -3.44%.

Prodigal's Asian (ex Japan) Equity fund, which utilises model trading, convertible and risk arbitrage, has maintained its positive track record in 2009 following a tough second half of 2008 when September and October losses produced a -20.35% return.

1 year return: +7.14%. Annual (June 2007): +7.63%

The fund was established in June 2007 and has annualised return since that time of 7.63%

Although reporting a disappointing 12 month return, the fund has now produced an average annualised return over 10 years of 16.7% after fees, against its benchmark the ASX300 Accumulation index which has returned 7.1% over the same period.

1 year return: -17.6%. Annual (Apr.1998): +15.7%

The fund which invests predominantly in Australian equities and is open to retail investors, was established in April 1998 and has approximately $230m in funds under management.