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.

The Pengana Emerging Companies Fund was down -1.9% in January, bringing its one year return to -44.8%.

Surprisingly the Fund's poor one year return outperformed both the S&P/ASX Small Industrials Accumulation Index and the Small Ordinaries Accumulation Index, which were down -46.7% and -47.9% respectively. The Fund will remain defensively positioned, pending the outcomes of the upcoming reporting season, and given the ongoing uncertainty in Australian markets.

Another Pengana fund, the Global Resources Fund, was up +2.43% in January, following a disappointing 2008 result (down -32.87%). The Fund, which was structured with a net long position, benefited from rising Australian dollar denominated commodity prices during January. Equinox, Vale and Rio Tinto contributed positive returns to the Fund, while losses were generated in Alumina and Anglo American.

St Helens Capital's Arran Fund, an actively managed long short equity fund, was up +3.67% in January while the ASX200 was down -4.88%.

This result comes after the Fund posted a respectable 2008 return of -5.44%. Gains were made on short positions in Newcrest Mining and long positions on Rio Tinto, partially negated by losses on Leighton Holdings (long) and CSL (short). The manager believes the Fund is well positioned to take advantage of the eventual upswing in equity markets, and believes there are positive signs for the Australian economy although this may not become apparent for another few months.

Naos Asset Management's two absolute return funds were mixed in January, after both funds experienced extremely disappointing returns in 2008.

The Naos Small Companies Fund was up +1.76% for the month, although in the 12 months to January it was down -54.74%. Illiquidity and deleveraging continued to affect small Australian listed companies, although the Fund is continually restructuring its long portfolio to include companies with strong medium term fundamentals and potential.

The Naos Absolute Return Fund was down -1.40% in January, bringing its 12 month return to -22.91%. The Fund maintained its defensive strategy during the month, with high levels of cash and investing 10-25% in long beta stocks. The Fund is looking to invest in companies that are sensitive to lower interest rates and lower Australian dollar, as well as in certain capital raisings.

The Apeiron Global Macro Fund, managed by Redwood Capital Group, produced a strong return of +3.82% in January, after ending 2008 up +18.83%.

Long positions in Gold, and entry points presenting themselves in both equity and bond markets during January helped drive the Fund to its positive result. Due to the ongoing volatility of global markets the manager will continue with a negative bias strategy, although there may be some tradeable rally opportunities in some oversold Asian equity markets. The Fund will also continue to trade long in Gold and precious metals, believing they will outperform the market in 2009.