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By Beverly Chandler, Opalesque London:

Australian-headquartered Zenith Investment Partners’ alternatives research team has reviewed five Australian market neutral funds in their 2011 Equity Market Neutral Review. The firm applies a screening and qualitative due diligence process to arrive at its list of 'the best’ of the Australian market neutral funds, a strategy that encompasses quantitative managers, fundamental stock pickers and those who employ relative value strategies.

Four funds were highly recommended by Zenith: Aurora Fortitude Absolute Return Fund; Bennelong Long Short Equity Fund; BlackRock Australian Equity Market Neutral Fund and the Regal Tasman Market Neutral Fund, while the Pengana Australian Market Neutral Fund was approved.

Returns for the Zenith 'Rated’ Market Neutral Funds 2011, as a group, were a cumulative return of 104.7% in the five years to November 2011, net of fees, while over the same period the broad Australian market has lost 23.3%.

The Zenith research team defines a market neutral strategy as one that seeks to profit from both increasing and decreasing prices in single multiple markets. The report says: "Market neutral strategies are often attained by taking matching and long and short positions in different stocks. This increases the returns from making good stock selections whilst simultaneously reducing the exposure to broad market mov......................

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