The Absolute Asian REIT Property Fund was down -4.27% (USD class) in January, while the Absolute Macro Diversified Fund was down -2.32% and the Absolute Trading 1 Fund -2.16%.

The Asian REIT market showed signs of decreased volatility for the second consecutive month, suggesting that the market is bottoming out, although prices were more mixed. The manager reduced exposure to Australian REITs, as they remain under pressure while the outlook for the Australian economy remains bleak.

The declining AUD affected returns for the Absolute Trading 1 Fund, however the manager will maintain a long position in AUD believing it has the scope to rise to $0.80 (USD) this year. They also added a short NZD position to the portfolio, expecting the NZD to lag the AUD in any recovery.

The Macro Diversified Fund continued to suffer from declining global equity and property markets, however did post a positive return with the Fund's gold position (over +5%) and soft commodities positions (+4%). This was more than offset however by losses in emerging markets equities and property.

HFA Accelerator Plus Ltd, a listed investment company, recorded an impressive return of +24.95% in January, due mainly to a 6.5x leverage level over the underlying fund.

The manager reported that all underlying portfolio strategies produced positive returns, in particular market neutral, equity long/short and relative value strategies.

This result comes as many other absolute return funds actively endeavour to reduce their amount of leverage, in response to extremely poor 2008 returns. It should be noted that although the company was up by almost +25% in January, its 3 month return is currently -31.85% and its 12 month return -65.49%. These figures show that although leverage can be extremely damaging to returns in adverse market conditions, in good times it can significantly increase investor value.

The TechInvest Intercept Capital Fund was down -0.59% in January, bringing its 12 month return to +10.8%.

The Fund continued to increase investments and short sales throughout January, and was 46% invested in 34 companies identified as undervalued by month end. Short sales (in 20 companies) made up 39% of the Fund, along with an index position. The portfolio ended January weighted towards the Wireless & Internet, Software & Services and Hardware & Equipment sectors. Positive contributors to the monthly return were Google and Apple Inc, while major detractors were Salesforce.com, eBay and Nokia.

The Platypus Australian Equity Fund, an equity long only fund, declined by -7.3% in January. This result comes after the Fund lost -44.93% over 2008.

The manager attributed January's poor result (which underperformed the ASX/S&P300 Accumulation Index by -2.46%) to negative returns on David Jones and Leighton Holdings. Both companies revised their profit guidance down by approximately 5% during the month, resulting in significant falls in price. No stock in the Fund's portfolio made a material positive contribution to overall performance. Poor market liquidity hindered the manager's attempts to reduce exposure to retail stocks, however they were encouraged by the significant decrease in market volatility, and signs that recent fiscal and monetary measures to stimulate the Australian economy are having a positive impact.

The Headland Global Diversified Fund returned -1.02% in January, due mainly to an overweight position in bonds.

Bond markets were negative in January as investors sold over concerns of increased government issuance. However although the Fund reduced its exposure over the month, it does remain in the bond market with the major trends of falling interest rates and lower inflation expectations. Losses were also experienced in FX markets, however the Fund benefited from falling commodity prices during January. A short position in crude oil made the largest positive contribution to overall performance, as oil prices fell 20% over the month.

Headland is a systematic Global Macro fund which commenced operations in November 2006, with annualised performance of +7.40% and total return of 16.58% since inception . In 2008 Headland returned a positive 1.75%, following a return of 9.96% in 2007.

The MQ Asia Long Short Fund was up +1.35% in January, although Korea was the only market that produced a positive return, including a -0.20% loss due to a long exposure to troubled Indian firm Satyam. Currently the Fund has just under US$200m under management, down from a peak of over US$800m.

With this result the Fund, which employs a quantitative equity long/short strategy in pan-Asian markets, recorded its third consecutive month of positive returns. January was also characterised by a record-high turnover level, as the manager took advantage of attractive trading opportunities.

The Platypus Australian Long/Short Fund was down -0.93% while the Platypus Asian Equities Fund was up +0.04% in January.

The Australian Long/Short Fund experienced a loss of -1.33% in its long positions against a gain of +0.48% in short positions in January. The Fund continued to have a low net exposure to the market (which has been the case since mid 2008), and does not expect exposure to be increased in the short term due to current market conditions.

The Asian Equities Fund increased its net exposure to Asian markets during the Chinese New Year holiday period in late January, with increased exposure in Hong Kong and Japanese markets against a reduced exposure to the Australian market.

Herschel Asset Management's Absolute Return Fund was down -1.46% in January, in a month where the Fund's net exposure was reduced to 25.1% (26.9% long and 1.8% short).

Until this month net exposure had been steadily increasing since September. Gains were recorded in positions in CSL, Woolworths, Tatts and Nufarm, while losses were made on Origin Energy, QBE Insurance, Telstra and Westpac, in another month of weak equity markets. This result follows on from a return of +0.30% in 2008.

Decreased forced institutional selling and lower market volatility drove the Elstree Enhanced Income Fund to a return of +1.31% in January, while the Elstree Australian Enhanced Income Fund was up +1.05%.

More specifically, both funds benefited from an underweight position in the banking sector, which underperformed the market as a whole. As interest rates continue to decline, and amid dividend and corporate profit uncertainty, the manager believes the search for income sources will be key to the funds' prospects over the medium term. They are encouraged by improving credit conditions globally, and with a greater stability in prices expect investors to become less risk averse in areas such as ASX listed hybrids. This combined with the decreased returns from deposits and dividends will further bolster the funds' prospects.

The Excalibur Absolute Return Fund posted a gain of +0.54% in January after a strong 2008, bringing its compounded annual return to +21.95%.

As market volatility decreases the manager is aiming for a 20%+ return in 2009, while maintaining a low level of risk. The Excalibur Absolute Return Fund is a currency/FX fund that holds AUD against the JPY, capturing the significant interest rate differentials between the countries whilst holding A$ put options over the core position to improve capacity, control risk and allow for profit generation in down months.