Zone Capital finished the year with a positive return in December of 0.5% after several months of strong gains. Over the year the fund gained a total of 17% compared with the S&P 500 which lost around 37%.

The manager said that, while the December result was weaker than the 4.2% gain achieved in November, it was a month of consolidation and they were happy to end the year in the black.

Agora Asset Management's Absolute Return Fund was up +1.25% in December, while the its Leveraged Absolute Return Fund was up +1.38% in a flat market. The 2008 return for these funds was -12.97% and -11.77% respectively.

Both funds significantly outperformed the S&P/ASX 200 Accumulation Index (-38.4%) in 2008, with most of the losses on the Absolute Return Fund coming in January (-9.2%). This means both funds have retained approximately 90% of their capital base, which will enable them to both recover their losses more quickly and invest in more opportunities in the coming months. Much uncertainty remains however on economic and market conditions in 2009, which will impact the funds' strategies.

The Allard Growth Fund (AGF) returned +9.3% in December, however was still down for 2008 by -28.8%, and the Allard Investment Fund (AIF) was up +4.5% in December, but down -1.9% for the financial year-to-date.

Both funds outperformed the MSCI A/P ex-Japan (A$) Index, which returned +0.8% in December and -20.5% financial year-to-date. The AGF and AIF are both equity long only absolute return funds, that use a combination of qualitative and quantitative processes to identify investments in the Asian region.

AR Capital Management's (ARCM) Ascot Fund ended 2008 on a positive note, recording a December return of +0.51%, bringing annual performance to +6.02%.

ARCM noted negative returns in banking stocks, and the poor handling of the Commonwealth Bank capital raising, as a major drag on performance in December. This offset positive returns in Paperlinx (long and short), Australian Agriculture and JB Hi-Fi (both long), amongst others. ARCM remains cautious for 2009, particularly in taking long positions, believing growth and earnings estimates will continue to be scaled back.

Kapstream’s Absolute Return Income Fund achieved a small gain of 0.46% in December bringing the year-to-date cumulative performance to positive 7.37%.

Kapstream employs a fixed income strategy and aims to generate absolute returns over multiple business cycles by incorporating high quality/high conviction trades while taking into account the global macroeconomic view and variables such as duration, yield curve and volatility which support the research and analysis.

The manager's outlook for 2009 says that regardless of whether Australia follows the US into recession it will certainly feel like one, however opportunities will arise for investors on the lookout for high quality short dated credit which should generate solid returns in an uncertain environment.

Platypus Asset Management recorded a small gain of 0.6% in December, bringing the result for the year to a loss of 44.9%. The manager said that the improvement was driven by holdings in consumer stocks such as JB HiFi and David Jones, although Billabong International had a negative impact.

The manager increased the fund's exposure to financial stocks to 35% of assets during the month, buying into NAB and ANZ. With RIO Tinto continuing to weigh heavily on the fund's performance the manager exited this position, instead concentrating on BHP and Woodside in the resources sector.

Naos Asset Management's Absoluite Return Fund remains largely invested in cash (77.8%) and outperformed the manager's Small Company Fund in December 2008. The Absolute Return Fund generated a positive return of 0.83% for the month while the Small Company Fund lost 1.32%. Over the whole year the difference is even more stark with the Absolute Return Fund losing 25.96% while the Small Companies Fund is down 63.28%.

The manager reports that small company stocks are being hit hard by illiquidity and the deleveraging process but believes that the companies held in the portfolio have sound medium term fundamentals and remain over-sold/under-valued.

The investment objective for both funds is to outperform the UBS Bank Bill Index over a rolling three year period regardless of market environment.

The Bennelong Long Short Equity Market Neutral Fund returned +0.49% in December after fees, taking 2008 returns to 9.36%, and an annualised return over 6 years since 2003 to 22.10%.

The fund outperformed the S&P/ASX200 in December, which recorded its 4th consecutive negative month, however conservative stock selection strategies and individual stock issues weighed down the fund's return. Bennelong welcomed the reduction in market volatility in December, however remains cautious in outlook and will remain defensive in the short term.

Bennelong was adversely affected by the ASIC ban on short selling in September, losing 8.57% in that month alone, before readjusting the portfolio and recovering over the balance of the year. The manager has performed consistently over the past six years employing a pairs trading strategy of top 100 ASX listed stocks to give investors an annualied return of 22.10%.

The Commodity Strategies Long/Short Programme reported a gain of +0.65% in December, and +22.28% in 2008. The Long Only Programme lost -0.13% in December but maintained a positive return of +10.47% for 2008.

Positive performance in December in the Long/Short Programme was attributed to strong returns on metals and industrial stocks, which were somewhat offset by losses in agricultural and grains stocks. The negative return in the Long Only Programme resulted from negative returns in metals stocks.

Both funds significantly outperformed their benchmarks in December - the Long/Short Programme outperformed its cash benchmark while the Long Only Programme outperformed to RJ CRB Index by +6.15%.

Funds managed by K2 Asset Management recovered some ground in December but still finished the year in negative territory. Best in the month was the Peak Asian Absolute Return Fund which gained 5.89% but remains 34.25% lower than the start of 2008.

Similar results were recorded for their other three funds. The Asian Absolute Return Fund was up 5.17% for the month but down 28.35% for the year, the Select International fund gained 5.09% for the month but lost 22.44% during the year, while the Australian Absolute Return Fund had the lowest result in December of 3.37% but over the year has the best result with a loss of 18.61%.

The manager believes that credit markets are slowly being repaired which will see equities become the most attractive asset class. On the back of this view they are increasing the net exposure of both the International and Asian funds.