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.

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.

The AMP Capital Total Return Fund returned -6.50% in December, capping off a disappointing year for the fund (down -33.17% after fees).

During December the fund brought its leverage back to around 1.2x, as per its stated goals for the last quarter of 2008, negatively impacting performance. Although painful, the manager believes this will enable the fund to better exploit future opportunities. Negative performance in the energy and materials sector also contributed to the December result, although the fund did see positive returns from many of its equity and relative value strategies. Ongoing volatility and lack of demand and liquidity in credit markets remained the salient factors in market conditions.

Tibra Capital's Market Neutal Fund was down -0.51% in December, however was up +4.86% overall in 2008.

The minor fall in Australian equity markets in December (the S&P/ASX200 was down 13 points, from 3672 to 3659) saw small movements in stock prices in all sectors the fund was invested in. Following the lifting of the blanket short selling ban in November the fund recommenced shorting individual stocks, in lieu of of a short index position. Long positions on materials and short positions in industrial stocks were key drivers of the December result.

The Tibra Capital Market Neutral Fund adopts a quantitative market netural investment strategy, identifying relative price opportunities in major equity markets.

Antipodean Capital Management's Global Volatility Arbitrage Strategy ended 2008 with a return of +3.22% in December and +17.34% YTD.

The strategy, which uses a stochastic volatility model to identify investment opportunities from a basket of equity and FX assets, attributed the positive December result to buying Equity S&P500 (VIX) put options.

Antipodean's other absolute return funds, the Diversified CTA Strategy and the A$ Currency Strategy (3x), returned +2.03% and -0.04% respectively in December.

TechInvest's Intercept Capital Fund reported a gain of +0.76% in December (+12.0% in 2008), outperforming the its benchmark (the UBS Australia Bank Bill Index) which returned +0.45% over the same period (+7.6% in 2008).

With markets firmer in December, positive returns were generated from both long (Accenture Ltd, MicroStrategy Inc) and short (Dell Inc) positions, as were negative returns (FTI Consulting, Apple, Satyam). December also saw the reintroduction of short sales, with 14 stocks being shorted during the month.

The Intercept Capital Fund is a long/short (market-neutral) fund that invests in global equities, diversified across up to 40 companies.

Select Asset Management's two diversified portfolios, the Select Defensive Portfolio and the Select Growth Portfolio, both ended 2008 deep in negative territory due mainly to poor fund of hedge fund (FoHF) performance.

The Select Defensive Portfolio was down -16.2%, and the Select Growth Portfolio down -26.8%, over the past 12 months. Given the weighting of FoHF's in each portfolio, and the gap between expected and actual returns, they were a significant drag on performance - the Gottex funds for example lost between -20.1% and -37.7% on average in the last quarter of 2008. In retrospect the manager believes the impact of redemptions and poor liquidity on FoHF's was underestimated. Other underperforming strategies in the last quarter of 2008 were property, infrastructure and long and long biased equities.

The portfolios did generate positive returns from other strategies, such as volatility and managed futures, as well as gold. Strong performance in December and early January indicates there are some positive signs for 2009, although markets will remain volatile.