Tactical Global Management Group's GTAA Fund gained a healthy 1.68% in January. However the manager remains cautious, saying that too much risk remains in taking positions at the asset-class level.

Performance was driven by short positions in equities in Japan where the market fell by almost 10% in the month, as well as short exposure to US and Australian stocks. Detracting from the result were a long exposure to UK and Australian bonds which were only partially offset by long exposure to US bonds. On the currency front the manager decided not to participate as data indicated that all currencies are close to being fairly valued.

Looking ahead TGA says thaty it expects European equities will outperform due to a relatively favourable profit outlook and positive valuation.

All three of Plato Asset Management's funds lost a little over 40% during 2008 and have kicked off 2009 with further losses. The Market Neutral Fund may have turned the corner however, down only 0.93% for the month, compared with the 4.4% loss for the 130/30 Fund and the 4.33% loss in the Core Composite Fund which runs a long only strategy.

Plato runs a quantitative system which uses a combination of value, momentum and quality factors aimed at taking advantage of market inefficiencies.

Pengana Capital's Emerging Companies Fund, which invests in small Australian listed companies, reported a loss of -1.9% in January while its benchmark (the S&P/ASX Small Industrials Accumulation Index) was down -5.3%.

The manager noted that market conditions remained volatile and economic conditions uncertain in January, although there were some positive signs in global credit markets. As a result the Fund remained defensively positioned during the month, though gains were recorded in positions in Duet Group (+23%) and Webjet (+10%) among others. Much uncertainty remains in general economic and earnings outlooks, so the Fund will remain cautious in the short term.

The MM&E Capital Takeover Target Fund was down -1.40% in January after ending 2008 down -30.84%.

The Fund remained heavily invested in cash for the month, although new postions in Tabcorp and Santos were entered while positions on Bank of Queensland and Origin Energy were exited. This enabled the Fund to outperform the ASX200 for the month (-4.88%). The manager expects the Fund to become more active in the market after the upcoming interim reporting season is over.

Regal’s Amazon Market Neutral fund has made a welcome return to positive territory following a tough six months in the second half of 2008. The manager has reported a positive 4.89% for January 2009, with their short book proving the benefit of hedging by contributing 6%, whilst their long positions lost 1%. Against this, the ASX was down almost 5% for the month.

Regal’s MD, Andrew King noted that they expect ongoing opportunities on the short side as profit warnings in the reporting season and capital raisings accelerate.

Regal’s Amazon recorded a one year rolling return of -4.78% and a 2008 return of -8.25%, with the majority of the negative performance coming in the second half after a strong first six months when they returned over 15%. Annualised returns since inception in September 2005 are 21.32%. Funds under management in the Cayman based offshore fund was US$43m.

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.

Goldman Sachs JBWere's Multi-Strategy Fund was closed on February 2, after freezing applications and redemptions in late November. The Fund is a fund of hedge funds, which offers Australian and New Zealand investors exposure to a variety of underlying managers and strategies.

Liquidity has proven to be a problem for fund of hedge funds in recent times, particularly due to the slide in the Australian dollar and in cases where the fund offers monthly liquidity however the underlying funds only allow quarterly or longer redemptions. Several other fund of hedge funds, including the BT Global Return Fund, Select Gottex Market Neutral Fund, HFA's Diversified and Octane Funds, DWS Strategic Value Fund and the Credit Suisse/Tremont Index Strategies Fund were also forced to freeze redemptions in late 2008.

As widely expected the Reserve Bank of Australia (RBA) reduced official interest rates by a further 100 basis points to 3.25% as a response to the global economic crisis.

The full text of the Board's media release follows:

'At its meeting today, the Board decided to reduce the cash rate by a further 100 basis points, to 3.25 per cent, effective 4 February 2009.

There was a significant deterioration in world economic conditions late in 2008. The effects on household and business confidence of the financial turmoil following Lehman’s collapse, and continuing strains on major financial institutions, saw a significant downturn in demand around the world. As a result, the major advanced economies contracted sharply in the December quarter, as did a number of emerging market economies. The Chinese economy, though still growing, has slowed markedly. Global inflation, having reached high rates during the middle of 2008, is now declining.

Measures to stabilise financial systems have contributed to an improvement in the functioning of credit markets over the past couple of months. This, in conjunction with expansionary macroeconomic policy measures being taken around the world, should assist in promoting global recovery over time. But the near-term outlook for the global economy is the weakest for many years.

Economic conditions in Australia have also been affected, though less than in other advanced economies. Australia’s financial system remains in a strong condition and large interest rate reductions over recent months have been passed through in substantial measure to end borrowers. Nonetheless, the combination of last year’s financial turmoil, a severe global downturn and substantial falls in commodity prices has had a significant dampening effect on confidence, and therefore on prospects for growth in demand. Inflation has begun to moderate and, given recent developments, it is likely to continue to decline.

In these circumstances, the Board judged that a further sizable reduction in the cash rate was appropriate, to give further support to demand. In making its decision, the Board took into account the package of measures announced by the Government earlier today. The combination of expansionary monetary and fiscal policies now in place will help to cushion the Australian economy from the contractionary forces coming from abroad.'

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.