A strong year for New Zealand managers

Well - the final numbers for 2008 are in for the Ernst & Young New Zealand Absolute Return Index - and it was a good year. The index finished the year +20.398% YTD after a +2.372% monthly performance in December. Since inception in June 2007 the index has posted a cumulative gain of 30.508% and is currently annualizing at 19.97%. Performance for the year was driven by strong gains in volatility, trend-following strategies and to a lesser extent, commodities. Equity market strategies suffered in line with broader market weakness but saw some late strength in December. We are now getting some interest in putting together a fund based on the index...so watch this space.

Another good month for New Zealand managers...

Hi - another good month for New Zealand managers with the Ernst and Young New Zealand Absolute Return Index returning +1.502% in November making it +17.597% year-to-date. Since inception the index has returned +27.471% and is currently annualizing at +19.24%. In terms of sectoral performance - weakness in global equities again in line with global equity indices, and strength in volatility and tail risk strategies.

Anthony Limbrick

Chairman

NZARA

Amber Partners on Madoff

Hi

Amber Partners, a London-based hedge fund certification business recently put out an interesting Amber Alert (comment) on Madoff.

Key points made were:

1. Investors who invested directly with Madoff did not buy shares in an offshore company or partnership interests in an onshore limited partnership.
2. It was extremely unusual for a firm of Madoff's size and supposed reputation to utilize an audit firm which was quite clearly not one of the "top 4" firms nor a specialist in auditing broker-dealers.
3. Amber Partners has never known a broker that refuses to send trade tickets to clients, other than in hard copy form via the postal system.
4. Madoff was infamous for not letting investors visit their offices to performan any on-site due diligence.
5. Many who invested with Madoff recognized the risks involved. A logical counter argument to all of the above "red flags" was that there would have to be substantial collusion within Madoff for such a fraud to go undetected for such a long period, and there was also the fact of his continued regulation by SEC and FINRA.

If you want a copy of the release, please register at the NZARA website (www.nzara.org). Once website access has been granted you may find the document in the Library on the site. You could also register on the Amber Partners website at www.amberpartners.com for future alerts and announcements.

Regards

Anthony Limbrick

From the FT - "Ten reasons to..."

Hi

The Financial Times (http://www.ft.com/) has some excellent columnists and their Alphaville blog (http://ftalphaville.ft.com) is a great way to get a real time view on market developments.

With the Madoff disaster putting the global alternative investment industry under even more pressure, I thought it was time for some educated light relief.

Please see the link below for "Ten reasons why you should hug a hedgie" from the Lombard column. Amusing - but also some good points made - points that should be considered before the proverbial "baby" is thrown out with "bath water".

http://www.ft.com/cms/s/0/0f5e33aa-cbdc-11dd-ba02-000077b07658.html

NZARA Endorses CAIA

Hi there,

As of this week the New Zealand Absolute Return Association (NZARA) is happy to endorse the Chartered Alternative Investment Analyst Association (CAIA), the global organization responsible for education of investment professionals active in the alternative investment industry.

CAIA's Chartered Alternative Investment Analyst qualification is a best-practice educational standard, now attempted by thousands of applicants from across the globe every year.
Please note the links below for more information on the CAIA program.

Preliminary Diagnostic Review - a test of the traditional finance material that candidates are expected to know).

Study Guide.

Mini Quiz (a sampling of CAIA test questions).

Candidate stats.

Representative firms.

Global chapters.

Meet a CAIA Member.

CAIA website.

Please note a representative of CAIA is likely to be visiting Australia and New Zealand in early 2009.

Response to the NBR article...

National Business Review today published an article with the headline "John Key annoys local hedge fund managers".

The New Zealand Absolute Return Association (NZARA) would like to clarify that the New Zealand investment managers represented by the association are not "annoyed" with the Prime Minister but have noted his comment regarding hedge funds, and take that as a continuity from recent statements implying improved disclosure may be one of the areas to get a regulatory boost. If this were to be so, NZARA would welcome this initiative. We believe transparency is healthy for all involved in the investment management industry, be they investment managers, investors or regulators.

Anthony Limbrick
Chairman
New Zealand Absolute Return Association

Link to the National Business Review article is below:

http://www.nbr.co.nz/article/private-bin-john-key-annoys-local-hedge-fund-managers-38262

A new member of the New Zealand index...

Pie Funds, an Auckland-based absolute return equity manager is to join the Ernst & Young New Zealand Absolute Return Index.

Pie Funds was founded by Mike Taylor and Richard Avery-Wright in 2007. Their flagship fund is the Pie Australasian Growth Fund which focuses on small to mid cap stocks and short term opportunistic trading.

The fund is unleveraged but has the ability to short futures and trade options for downside protection. Since inception, the fund has outperformed the ASX small cap index by around 20% p.a.

Link here: http://www.piefunds.co.nz/