The Pengana Global Small Companies Solution was down -2.2% in December and was -47.5% for 2008. The Pengana Property Securities Fund was also negative in December, down -9.9% (-57.2% for 2008).

The Global Small Companies Solution, a fund of funds which invests with small regional company investment specialists, attributed the result to poor returns from their European manager, which offset positive performance from North America and Asia. The sharp depreciation of the Australian dollar also affected the final result.

The Property Securities Fund, which invests in listed real estate investments, outperformed the sector by +0.59% in December with a portfolio heavily weighted towards larger, less risky business models. The manager will remain cautious regarding the A-REIT sector going into 2009.

Shell Cove Capital Management's Black Marlin Fund returned a disappointing -3.49% in December, however was up +29.15% for 2008.

A sell off of resource equities and a rally in Australian bank stocks were the key drivers of the negative December result. Long volatility positions in US dollar bonds also produced negative returns. The manager believes there are still downside risks heading into 2009, and will remain cautious while looking out for clearer trending characteristics.

The Black Marlin Funds employs a global macro investment approach using long volatility strategies in equities, commodities, foreign exchange and fixed interest markets.

St Helens Capital's (SHC) two absolute return funds, the SHC Arran Fund and the SHC Ailsa Fund, reported gains of +1.27% and +1.51% respectively in December. Both funds significantly outperformed the ASX200 in 2008 (-38.97%), the Arran Fund returning -5.44% and the Ailsa Fund -3.70%.

Both funds, which are Australian equity long/short funds, had a net long exposure in December and gained positive returns from positions in BHP and Wooloworths, among others. Negative returns came from positions in QBE and RIO, among others.

Looking forward into 2009 the manager is cautious in outlook, however is still hopeful there will be some positive catalysts to reverse some of the 2008 declines.

Headland Global Asset Management's Global Diversified Fund, which has mainly been invested in cash since the Lehman Brothers investment bank collapse in September, returned +0.23% in December (+1.61% in 2008). The fund began to re-enter investment positions in early January.

The fund's investment strategies are consistent with the manager's negative outlook for the global economy, and include short positions in commodities and exposure to government debt.

The Headland Global Diversified Fund uses quantitative techniques to allocate capital to major investment themes in global bond, currency and commodity markets.

The Apeiron Global Macro Fund posted a return of -0.43% in December, however was up +18.83% for 2008.

The loss in December was attributed to losses in the fund's foreign exchange and commodity strategies, amidst lightly traded markets. The fund exited the US dollar markets in early December due to market volatility and the lack of market direction going into the Christmas break. The Apeiron Global Macro Fund, managed by Redwood Capital Group, utilises strategies in futures and foreign exchange markets, and seeks to define investment themes within a fundamental economic framework.

Playtpus Capital Management's Asian Equities Fund, which commenced investing in September 2008, was down -0.87% in December but up +1.42% for 2008. Over the same period the MSCI Pacific Index returned -29.31%.

The negative return in December was attributed to the fund's net short weighting, as well as stock specific issues, however assets under management increased during this period. The fund will continue with the short positioning of its portfolio given the ongoing downward trends in Asian markets.

Platypus' other fund, the Platypus Australian Long/Short Fund, also recorded a loss in December (-0.72%) and was down -7.20% in 2008. December was notable for the decrease in market volatility, however there was significant movement in individual stocks. The fund remains heavily invested in cash going into 2009, reflecting current market conditions.

The Antares Lodestar Absolute Return Trust returned -1.44% in December, compared to the Australian sharemarket which lost -0.3% in the same period. The fund outperformed the market for most of the month, but was adversely impacted by a late market rally leading into the New Year.

Positive returns were generated from strategies in Challenger Financial, Felix Resources and Centennial Coal, offset by poor performance in Clough, BHP and Bradken. Overall the fund returned -23.6% in 2008, most of the loss occurring in the last quarter. The fund lowered its market exposure towards the end of December, remaining cautious for 2009, although the manager has noted a number of positive indicators in its outlook.

Two of Absolute Asset Management's three funds recorded positive returns in December. The Absolute Macro Diversified Fund was up +1.45% (-23.53% in 2008) while the Asian REIT Property Fund gained +1.23% (down -49.38% in 2008 including dividend). The Absolute Trading 1 Fund was down -0.80% in December (+5.54% in 2008).

The manager noted that there are some signs the long decline in REIT values was coming to an end, noting positive indicators in Hong Kong and Singapore property markets. Australian REITs however continued to underperform, and the fund believes a reduction in exposure to the Australian sector may be warranted.

The Absolute Macro Diversified Fund ended 2008 strongly after a difficult year, mostly due to positive returns in emerging markets and China equities, and in gold. The fund will look to reduce cash balances in the medium term as volatility decreases. Unlike some other hedge funds, the fund remains open to new investment and redemptions during this difficult period.

Although it was down in December, the Absolute Trading 1 Fund was positive for 2008. The fund profited from closing out its short NZD position, but lost on other positions due to the recent strength of the US dollar.

The Arnott Opportunities Fund, a Pan Asian Equity Long/Short fund, has finished 2008 with a positive performance of +0.38% for December, bringing the total return for 2008 to +1.84%.

The fund reduced exposure in December ahead of significant redemptions which saw Arnott's FUM fall by approximately 35% to US$535 million, all of which were expected to be paid before the end of January. The manager also flagged that 2009 would see a different outlook and implementation towards shorter term trading opportunities around stock specific events.

Arnott's redemption experience is in line with many other successful and positively performing funds as investors and Fund of Funds have reduced their exposure to managers with both good performance and liquidity to shore up poorly performing investments elsewhere.

The Herschel Absolute Return Fund, an Australian equity long/short fund, reported a December return of +2.04% and an overall 2008 return of +0.30%.

The All Ordinaries Accumulation Index in comparison returned -0.08% in December and was down over 40% in 2008. The fund increased its net equity market exposure, and participated in a number of capital raisings in December. Positive returns from QBE, Crown and Tatts Group were offset by losses on positions on Incitec, CSL and Telstra.