The Bennelong equity market neutral fund, which won the award for the best market neutral fund in Australia in 2008, has defied the shorting ban on financial stocks to report an impressive return of 7.88% in February to bring results for 2009 year-to-date to 14.02%.

Annualised performance over six years has been 23.97%, whilst performance in the past 12 months of arguably the most difficult market conditions since the great depression have been 30.54%.

Bennelong suffered some fund outflows in the final quarter of 2008 as offshore fund of funds struggled with liquidity issues, but has vindicated remaining investors' faith by outperforming the ASX200 by over 25% in just two months, and by 70% over the past year.

Bennelong manages just over A$50 million using a relative value pairs strategy which has provided 83% positive months since inception and has a rolling 12 month Sharpe ratio of 1.6.

Apeiron Global Macro has reported a dip in performance for February 2009, but remains positive for the year to date with a return of +2.83%.

Apeiron was one of the top performing funds in AFM's database of over 200 funds in 2008, with a return of 18.83% for the year, after all fees, following a return of 20.79% in 2007. 

Apeiron's annualised performance over 3 years since inception is 18.92% with a sharpe ratio of 1.28.

The MM&E Capital Investment Trust No. 2 recorded a small gain of +0.36% in February, and is now up +0.58% for 2009.

The Fund profited from the takeover of Pure Energy, which both Arrow Energy and BG Group PLC are contesting, as well as the successful bid for Incremental Petroleum by TransAtlantic Australia. Convertible notes issued by St George as a result of its takeover by Westpac also benefited the Fund. Takeover activity continued throughout February, with bids for Gloucester Coal and Oz Minerals coming late in the month.

The Pengana Emerging Companies Fund was down -1.7% in February, while the S&P/ASX Small Industrials Accumulation Index was down -10.3%.

The manager credited this good result to the Fund's risk averse strategy, avoiding econonmically sensitive stocks, as well as those that are cheap but have uncertainty surrounding their balance sheets and earnings. The Fund's portfolio is currently made up of defensive stocks with good medium to long term prospects, however in a market focussed on the short term the manager believes this is not being rewarded. Individual stocks that performed well were Thinksmart, ASG Group and MacMillan Shakespeare, offset by losses on Duet, Sonic Healthcare and Spark Infrastructure.

Platinum's suite of funds struggled in February with the best, their International Technology Fund, limiting its losses to 2.1%. After that the next best funds were the International Brands Fund and International Fund which both lost 5.6%, through to their worst performer, the Unhedged Fund, which fell 8.6%.

The only Platinum Fund to have achieved a positive return for the last twelve months is the 4.8% generated by the Japan Fund, but increasingly difficult economic conditions in Japan saw the fund lose 7.9% in February.

Platinum is largley owned by staff and relies on joint ventures for distribution through companies such as MLC Investments in Australia and Optima Fund Management in New York.

The Elstree Enhanced Income Fund lost -8.24% in February, including a -2.5% loss on a further markdown on the unlisted AXA note currently owned by the Fund.

This result brings the Fund's 12 month return to -33.23%. The manager however was encouraged by signs that the underlying issuers of securities held by the Fund are taking steps to stabilise their balance sheets. This was done mainly by selling assets or raising equity, or both.

The Attunga Enviro Opportunities Fund was down -4.61% in February, down on its +11.12% return in January. Attunga’s Agricultural Trading Fund was also down on its January result, up +0.18% after gaining +4.98% last month.

Cooler weather, apart from one hot day in Victoria, kept electricity prices and volatility low during February, which was the main factor in the Enviro Opportunities Fund’s negative result. February also saw renewed interest in the proposed emissions trading scheme, with opposition parties in the Senate announcing an enquiry into the scheme a week after the Government’s enquiry was cancelled. The manager believes this regulatory uncertainty will create volatility, and therefore opportunity, in power markets throughout 2009.

The lack of significant fundamental news on agricultural markets in February drove the Agricultural Trading Fund’s flat result. Gains were made on cross commodity spreads on soft and hard wheat, as well as carry trades in canola and wheat. Mark to market losses were made on volatility spreads between canola, bean oil and corn.

The MM&E Capital Takeover Target Fund was up +0.28% in February, after posting a loss of -1.40% in January. This result came about while the S&P/ASX 200 lost -5.5% over the same period.

Discounted capital raisings, such as Suncorp-Metway, as well as adhering to stop loss limits helped drive the Fund to its positive result. Negative results came from holdings in Insurance Australia Group, Healthscope and Caltex.

The Austral Equity Fund recorded a small loss of -0.04% in February, following on from a +0.74% gain in January. Due to poor interim company reports and a lack of forward guidance, as well as often misleading disclosures regarding capital raisings, the Fund remained lightly invested.

During February the Fund held significant amounts in cash (69%) and short term investment grade corporate credit. More specifically, the Fund continued to hold Macquarie Airport Tickets, which fell later in the month, while the proceeds from its CBA Perls II will be received shortly.

Australia's financial regulator, ASIC has decided to extend their ban on the short selling of financial stocks for the third time, making it the only country (with the exception of Holland) to maintain a ban on covered short selling.

Citing ongoing market volatility, and potential aggressive and predatory practices by short sellers, ASIC acknowledged that it was prepared allow the market to forgo some price discovery and market efficiency.

ASIC advised that it had discussed the situation with regulators elsewhere, but their decision (although not unexpected) is at odds with the actions of regulators in the US, UK and Hong Kong, who have all lifted the bans, or in the case of Hong Kong, not implemented a ban in the first place.

At ASIC's summer school held earlier this week, representatives of all three offshore regulators indicated that their bans were either no longer necessary, or in the case of Hong Kong, never required.

ASIC also advised it was remaining vigilant to conduct which allowed the ban to be circumvented, presumably referring to the use of derivative and arbitrage strategies. However, as there are widespread exemptions to the ban for market makers and option strategies, this seems to be contradictory.

ASIC's current reporting regime for the reporting only of gross short sales also remains in place, leaving the market no better informed as to the real extent of short selling taking place, and therefore allowing rumour and inuendo to continue.