The Commodity Strategies Long/Short Fund recorded a loss of -2.31% in April, while the Long Only Fund also dropped by -1.03%. The 2009 return for these Funds now stands at -3.17% and +0.07% respectively.

For both Funds mixed results in energy commodity trading strategies were the key drivers of overall return. Strong gains in crude oil, natural gas and gasoline were negated by losses on gas oil and heating oil, as well as platinum, for the Long/Short Fund. The Long Only Fund had a similar result, also recording losses on gold and silver.

Although the Funds' returns in 2009 have been disappointing, both Funds have retained impressive annualised returns (+11.32% for the Long Only Fund and +23.22% for the Long/Short Fund).

Attunga Capital’s Power & Enviro Opportunities Fund made a small loss of -0.24% in April, as uncertainty lingered over the Federal Government’s carbon trading scheme, and electricity demand declined.

The Fund’s 2009 return now stands at +10.51%. The ongoing uncertainty surrounding the Government’s Carbon Pollution Reduction Scheme and its inception timetable affected FY 2011 contracts, however the announcement after month end that the scheme was to be postponed by 12 months will create greater certainty in these markets. The manager noted also that the scheme was still at risk of being rejected in the Senate.

In power markets, generator outages and hydro generation bidding strategies held up prices, however overall the sector experienced a decline in demand which was expected by the manager.

The Attunga Agricultural Trading Fund also had a quiet month, gaining +0.69% to bring its 2009 return to +9.85%.

The strong rebound in equity markets both in Australia and overseas saw Equity based hedge funds managed in Australia post not only their best returns this year, but for the past three years. When taking the results of all funds - including non equity strategies such as Global Macro and Commodities, and including funds of funds, it was the best result since the start of the Global Financial Crisis in late 2007.

For detailed analysis of performance for each strategy, industry comment and ranking tables, please open the attached .pdf file.

ATTACHED FILESAFM March 2009 Performance Review (pdf format)

In a move that probably surprised no one just a week out from the Federal Government's budget due to be announced next Tuesday, the RBA has left rates on hold at 3.0 per cent.

In announcing the decision the RBA noted that although the economy both locally and globally has continued to contract in the first few months of the year, there are signs of stabilisation in several countries, and a pick up in China and in several commodity prices.

The announcement also noted the gradual improvement in global financial markets, with equity prices off their lows, term spreads declining and capital markets re-opening. Against this they noted a continuing fragility in confidence and ongoing pressure on balance sheets, along with tight credit markets.

The Bank sees inflation reasonably contained, with labour markets likely to weaken further, although imported goods are likely to balance this out somewhat given the weak exchange rate.

The Bank included their usual caveat that they will "continue to monitor how economic and financial conditions unfold..." when considering any further reductions in the cash rate are required.  Our guess is that there's not much room to move on the downside from here barring further major problems emerging from the GFC.

The Aurora Property Buy-Write Income Trust, which has been invested in cash since October 2008, posted another small gain of +0.41% in March. The manager announced the Fund recommenced investing in property securities in April.

The Fund, which sells call options over a portfolio of Australian REITs (or AREITs), is expected to be fully invested by the end of April. Due to the recent economic turmoil the AREIT sector, which traditionally has been considered to be defensive, took on some non-defensive characteristics which affected returns. Sharp decreases in interest rates and the falling Australian dollar also affected the sector. The manager however believes that AREITs remain attractive due to low interest rates and low amount of leverage in the property sector (due to the security of the lease), although the depth and severity of the current downturn is yet to be seen.

The Denning Pryce Equity Income Fund bounced back strongly in March with a return of +8.12%, after posting six months of losses.

The Fund outperformed the S&P/ASX 50 Accumulation Index by 0.10% for the month, and the result brings the Fund's 2009 return into the black (+0.94%). The most positive contributions came from Macquarie Group (positions returned over +60%), Macquarie Infrastructure (+42%) and Onesteel (+42%). Negative contributions stemmed from positions in OZ Minerals, CSL and Fosters. The Funded ended March heavily weighted towards financial stocks (excluding property), with smaller allocations to the materials and consumer staples sectors.

The BlackRock Asset Allocation Alpha Fund recorded a loss of -3.39% in March, the Fund's first negative return since July 2008. This brings the Fund's 2009 return to -0.32%.

The main detractors from performance were short equity positions in US, German and Australian markets, reflecting the rallies that occured in these markets in late March. Short positions in the Australian and New Zealand dollar also produced negative returns for the Fund. The manager noted with approval that the speed of the decline of the global economy has eased, and consequently reduced the amount of risk averse positions in the Fund's portfolio (including short equities, long government bonds and short commodity currencies). However they remain skeptical that the rebounds seen in markets in March are the first signs of a global recovery.

The Excalibur Absolute Return Fund was up +0.87% in March, the fourth consecutive month the Fund has posted a positive return. The largest loss posted by the Fund in the last 12 months was -0.94% in November 2008.

The Fund's 2009 return is +3.75%, following on from a 2008 return of +12.23%, with the largest monthly gain of +3.74% in December. The Fund trades AUD/JPY currency pairs using a 50/50 systematic/discretionary trading approach, and has a track record since July 2006.

The Wingate Global Equity Income Fund posted a gain of +2.91% in March on the back market rebounds late in the month. The Fund outperformed its benchmark, the MSCI World (ex Aust) $A Net Dividends Reinvested Index by +4.31%.

The Fund, which sells put options on shares to generate income and provide a buffer against falls in share prices, was protected in part against lower equity prices in the first quarter of 2009 by a high level of income on derivatives. The Fund continued to invest in sectors that are not dependent on positive expectations for the future or excessively reliant on credit markets, such as consumer goods. As a result the Fund was underweight in financials in March (9% of the portfolio) due to the uncertainty surrounding the near future for financial institutions. Although there are no immediate signs of recovery in global markets, the manager believes there are still undervalued companies around and remains confident in investing in well capitalised firms.

The Headland Global Diversified Fund lost -3.90% in March, due mainly to the strong market rallies during the month.

Although the manager acknowledged that the positive performance of equity and commodity markets in March hurt the Fund's overall return, they still believe that a full recovery will take some time to achieve. As a result the Fund's asset allocation remained unchanged.

The announcement of quantitative easing procedures by central banks around the world offset the need for greater issuance to pay for government spending, resulting in mixed returns in bond markets. Currencies also rallied against the US dollar after it was announced the US was printing more money. As the Fund has an overweight position in bonds as well as positions in FX markets (CAD against USD), both sectors produces losses for the Fund. The most significant loss however came from commodities, where the Fund gave up recent gains as markets rallied from lows earlier in the year.