The Australian share market has shown signs of recovery after achieving a 37.6 per cent return for 2009, according to the latest Mercer Sector Survey.

"Australian shares managers produced a good performance relative to the index, outperforming the S&P/ASX 300 by 1.9 per cent," the industry report said.

Despite being the best calendar year return since 1993, the Australian market wasn't able to eclipse the 39.8 per cent loss in 2008. 

The Australian market was 20 per cent lower than at its highest point in October 2007.

The top-performing fund for the year was Perpetual Ethical, up from 120th position last year with a 70.4 per cent return.

Tribeca Alpha Plus (60.1 per cent), UBS HALO (59.6 per cent), Hyperion Growth (59.5 per cent) and Independent (59.3 per cent) rounded out the top five.

"The choice of manager was again important for the year. An upper quartile manager would have produced a return of over 44.1 per cent, while a lower quartile manager would have returned worse than 35.9 per cent for the year," according to the report.

The median managers outperformed the index by 1.9 per cent and this comes on the back of the prior year's 2.2 per cent outperformance.

"This is above the long-term outperformance of 1.4 per cent before fees," the report said.

The overseas share markets declined over 2009, with the MSCI World ex Australia index falling 0.3 per cent in Australian dollar terms. However, hedged investors did better due to the rise in the Australian dollar against most currencies.

The top five performing international equity managers were Franklin, Perennial High Alpha, EQT Intrinsic Value, Schroder QEP Value and Orbis.