The Platinum International Health Care Fund lost -0.40% in March, while all the other Platinum funds reported gains ranging from +0.90% (International Fund) to +4.90% (Asia Fund).

These results represent a significant turnaround for Platinum, whose funds all reported losses in February. In addition, all funds outperformed the MSCI ALl Country World Index for March. Refer to the AFM Fund Selector for full details of each fund's performance.

The PM Capital Absolute Performance Fund was up +9.4% in March, while the Australian Opportunities Fund gained an impressive +14.9%. Unlike many other funds in the current climate of economic uncertainty, both funds were fully invested for the month, which boosted performance.

Strong rallies in global equity markets, specifically financial and media stocks, pushed both funds to strong performances. The Absolute Performance Fund (ARF) lost ground in currency markets, as the US dollar was sold off due to the recent financial stimulus measures adopted in the US. March also saw the adding of resources positions to the ARF's portfolio for the first time in nearly two years, triggered by recent stock price falls. For the Australian Opportunities Fund Macquarie Group, PMP and Harvey Norman were key positive contributors, offset by negative returns in Austar and Fosters.

PM Capital's other fund in the AFM database, the Enhanced Yield Fund, posted a more modest gain of +1.0% in March.

With just over 20% of single manager results to hand, early indicators are that performance from Australian absolute return funds in March was positive, although as might be expected, well below the stellar performance of the ASX200 and the S&P500 in the US.

Equity based funds reporting to date returned 2.61%, with non equity funds returning 0.86%.

Equity markets showed extreme volatility, as can be seen from the SPI futures contract which started the month by falling 8% only to promptly rally by 24% from the lows to close the month with a gain of 10%. Much of the rally was focused on just 8 stocks, with the big four banks, Macquarie and Wesfarmers, along with BHP and RIO, accounting for over 80% of the gains made in the ASX200.

Not surprisingly some equity based managers who have suffered in the bear market of 2008 produced excellent returns, with PM Capital’s Opportunities fund leading the pack with a return of 14.9% for the month, and Pengana’s Australian Equities long/short bringing home 7.60%. St Helen’s Arran fund returned 6.55%, bringing YTD to 9.44%, and 12 month performance to +3.35%.

The Amazon Market Neutral Fund, managed by Regal Funds Management, posted a gain of +0.76% in March, bringing its 2009 return to +5.37%. The Regal Tasman Market Neutral Fund gained +1.07% and is now up +6.95% for 2009.

Both Fund's short positions lost 8% as equity markets rallied during March, however this was offset by gains on long positions of around 9%. Two Macquarie satellite funds (MIG and MCG), which were purchased after both suffered heavy selling, performed particularly well during the month, which the manager attributed to Macquarie's incentives to produce higher share pirces by the end of Macquarie's financial year (31st March). Although the manager sees the current rally possibly continuing into the next few months, there is still a lot of economic uncertainty in markets. As a result the Funds will continue to focus on stock specific risks as much as possible.

The MM&E Capital Investment Trust No. 1 was up +0.26% in March, following on from gains in January and February.

Successful closeouts of positions in St George Convertible Preference shares as well as a share placement in AXA Asia Pacific pushed the Fund to a positive result for March. The Fund was also able to avoid two notable failed deals during the month, OZ Minerals and Adelaide Managed Fund Asset Backed Yield Trust.

The MM&E Capital Takeover Target Fund also recorded a gain in March, up +1.83%. The Fund remained underinvested for the month, causing it to underperform the market which gained approximately 7%. Positive returns came from positions in BOQ and Santos, while the Fund also profitably closed out a position in AXA Asia Pacific. Negative returns came from Healthscope, which was closed out during the month, and Lion Nathan. The manager will look to increase the level of investment by the Fund over the next few months.

The Austral Equity Fund made a small gain in March, up +0.57%, following on from similar returns in January and February. The Fund remained defensively positioned in equities due to ongoing volatility.

The manager noted global equity markets rallied in March, up around +7% with a notable decrease in capital raisings, which had previously held back market gains. The Fund will remain defensive in equities while economic conditions remain poor and while balance sheet and liquidity disclosures remain inadequate.

The Fund did however increase its exposure to credit markets, specifically to short duration corporate credit, while maintaining existing positions in Macquarie Airports Tickets. At month end the Fund had a 37.5% exposure to interest rate securities and a 60.3% cash position.

The Attunga Agricultural Fund was up +3.73% in March, while the Enviro Opportunities Fund gained +4.51%. Attunga's offshore fund posted the strongest return, up +6.9% for the month.

Agricultural markets ended March higher, the Agricultural Fund benefiting from higher soy prices (due to tigher supply in the US as well as ongoing concerns over production in South America) in particular. Volatility spreads in corn, wheat, canola and soybean oil options also provided positive returns for the Fund.

March was characterised by significant falls in carbon affected electricity contract prices for the Enviro Opportunities Fund. With the Federal Government's Carbon Pollution Reduction Scheme (CPRS) due to be rolled out from July 2010, the electricity curve needed to factor in a carbon component however carbon prices fell dramatically during the month. Electricity contracts were slow to react to this, and this combined with the growing policital risks surrounding the CPRS and the impending start date conspired to reduce carbon-electricity spreads. The manager noted that the CPRS may cause an increase of approximately 85% of the cost of a tonne of carbon. They also noted that with plenty of debate ahead for the CPRS there will be many trading opportunities for the Fund.

As equity markets around the globe continued to be buffeted in February, Australia’s Absolute Return and Hedge Fund industry slipped into the red, collectively losing 1.6% for the month, and erasing January’s gains to be down 1.21% for the year to date, based on 78% of local funds returns.

Against this the S&P 500 index in America lost 10.99% in February to bring year-to-date losses to minus 18.62%, while on the local front the ASX 200 lost 5.54% to show a cumulative decline in the first two months of 2009 of 10.15%.

When put in perspective, 48% of the over 200 funds listed in Australian Fund Monitors index of hedge funds have produced a positive return in the first two months of 2009, with 84% of all funds outperforming the ASX 200.

The results, whilst not universally positive, again showed that in times of adversity hedge funds, far from being the speculative vehicles that they are frequently portrayed as, provided diversity and significantly better risk profiles than equities alone.

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

ATTACHED FILESAFM February performance review (pdf format)

The Aurora Property Buy-Write Income Trust posted its fifth consective month of positive returns, up +0.17% in February.

The Trust, which generates income from writing call options over Australian REITs, recorded this result in a month where REITs underperformed the broader equity index by -11.8%. The manager noted with approval the reduction of target debt levels in the sector, as well as the scaling back of operations to the REITs core businesses (passive rent collecting) and ongoing transparency in reporting.

Another Aurora fund, the Buy-Write Income Trust, gained +1.08% in February. Calls written over Westpac which were exercised during the month produced a positive return, and written calls over Telstra, Newcrest and NAB among others provided additional income. The Trust maintained a high level of cash (ending the month at 76%), and the manager believes the fund will become more invested over the medium term.

The Black Marlin Fund, managed by Shell Cove Capital Management, was down a disappointing -15.61% in February on the back of two mistimed short dated long option volatility positions which were held to expiry. This result brings the Fund's 2009 return to -17.6%, following a positive return in 2008 of +29.15%.

The Fund's US long bond volatility position lost -6.25% during the month, and its resource volatility long position was down -5.93%, which were the main contributors to the overall result. Despite this the manager expressed confidence that their "long volatility strategy will provide positive returns in the future, as it has in the past, although expiry profiles will need to be managed carefully."