Apeiron's Global Macro Fund has continued the recent positive performance, returning +5.21% after fees in October, as a follow up from September's performance of +7.22%. On a 2008 YTD basis the fund has returned an impressive 19.81%, in line with their annualised return since inception in February 2006 of +19.47%.

Apeiron's performance report indicated that the result was achieved in spite of remaining heavily weighted towards cash, with remaining exposure predominantly on the short side, and as a macro manager trading futures and FX markets, not inhibited by the equity short selling bans.

Bennelong's Long/Short Equity Fund has produced a positive result of +3.78% in October, with the manager lamenting the lost opportunities associated with the ongoing short selling ban.

In the latest monthly comment, the Manager's view is that there is likely to be further deleveraging as domestic corporate and household sectors have not yet sufficiently reduced leverage from the previously grossly inflated levels, and that this will possibly lead to further disorderly (i.e. forced) debt reduction.

Bennelong has been one of the best performing Equity Managers in the Australian market this year with performance YTD of 7.92%.

Pengana's Australian Equities Long Short fund lost 13.5% net after all fees in October, bringing their 6 month performance to -21%, vs the ASX300 Accumulation Index which fell 12.9% in October, and has fallen 26.9% over the past 6 months.

Pengana manages a range of funds, which struggled in October's unprecedented volatility.  The Pengana Global Resources Fund fell over 12%, following  a fall of -20% in September.

Pengana's Global Volatility Fund, which was launched with much fanfare in November 2007 and initially performed well in the first half of 2008, appears to have ceased reporting returns.

Platinum Asset Management, Australia's largest Absolute Return fund manager with over $14b in total assets under management, provided investors a range of returns for October, with the flagship Platinum International Fund, a global equity long/short fund with over $7 billion in FUM recording +1.30% for the month.

On a monthly basis, Platinum's Japan Fund was their best performer, returning 5.00%, whilst their European Equity L/S fund was the worst performer with a negative 12.30%.

Regal's Amazon and Tasman Market Neutral Funds fell -1.26% and -4.15% respectively in October against a backdrop of a fall of 14% in the ASX, as long standing short positions continued to work well in the weak overall market.  However, positive performance from the short positions in both funds was not sufficient to offset one long position which fell over 50%.

Regal Funds Management was established by Andrew King in January 2004 and manages four funds.  The Amazon Fund was established in September 2005 and has an annualised return of +21.69% since inception, while the Tasman Fund was established in May 2007 and has an annualised return since inception of +12.39%.

Headland's Global Diversified Fund completed 24 months track record with a positive October performance of +0.22%, bringing 2008 YTD to +1.31%, after moving substantially to guaranteed bank deposits to avoid the risk of volatile markets.

Citing extreme volatility in multiple markets, Headland's CIO Jerry Pressnell remained committed to capital preservation with 98.8% of the Fund's assets in bank deposits covered under the Australian Government's recent guarantee.

Headland has returned 8.28% annualised since inception and invests in bonds, currencies and commodities to provide wholesale investors an alternative strategy designed to provide a low correlation to equities.

Australia's Absolute Return & Hedge Funds continued to weather the storm in financial markets and outperform the broader equity benchmarks to the end of September, in spite of losing -8.68% on a year to date (YTD) basis. The ASX200 was down nearly 25% during this period, while the average September hedge fund return in AFM's database of over 200 funds was down -4.78% vs. the ASX200’s loss of 9.85%.

This year Hedge Funds have had to navigate the credit crisis and volatile markets, massive deleveraging and more recently the sharp selloff in commodity prices all of which have combined to see some funds to report significant negative returns. However, against that 24% of local funds have achieved a positive return year to date, and 19% were positive in September. 87% of funds in our database have outperformed the ASX200.

In addition Australian managers have also had to handle political and regulatory volatility, as the local regulator, ASIC, went well beyond their offshore counterparts by banning all short selling, and then reversing that decision with a series of amendments. Policy on the run has not made life easier for managers, or returns better for investors. Some semblance of clarity has returned with a new set of guidelines (mainly enforcing transparency of short positions) due to come into effect on 19th November, although short sales in Australia’s financial sector remain restricted until late January.

To read the full report download the file below.

ATTACHED FILESAbsolute Return & Hedge Fund Performance Review September 2008 (pdf format)

Everest Babcock & Brown (EBB) has released a statement in relation to media speculation around a possible sale of its hedge fund business. The Australian Financial Review had previously reported that an announcement on a sale was expected to be made within a month.

In the release, EBB stated: "As previously announced to the market, EBB continues to consider strategic partnerships with institutions and funds management businesses both in Australia and internationally. This process may result in the sale by existing shareholders of their holdings in EBB, or the full sale of EBB."

These discussions have progressed but there is no certainty that any agreement will be reached. We are therefore unable to comment on when or if any potential transactions will occur."

Australian Fund Monitors currently tracks the performance of nine (9) absolute return (or hedge) funds managed by EBB.

Commodity Strategies has reported October results for its long/short and long only programs, returning +8.77% and +22.58% YTD for the Long/Short, and -0.53% and +9.67% YTD for the Long only.

Commodity Strategies was established in 1999 by Robert Holroyd with the objective of providing diversification from and low correlation to equity markets.

The Reserve Bank issued the following statement at 14:30 AEST Tuesday 4th November:

"At its meeting today, the Board decided to reduce the cash rate by 75 basis points to 5.25 per cent, effective 5 November 2008.

World financial markets have remained turbulent over the past month. Global equity prices have been volatile and fell further in net terms, and there have been significant exchange rate movements, including a sharp depreciation of the Australian dollar.  A number of governments have announced measures to strengthen their financial systems, which should help to stabilise conditions over time.

International economic data have continued to point to significant weakness in the major industrial economies, and there have been further signs that China and other parts of the developing world are slowing as well. These conditions have contributed to further falls in world commodity prices.

In Australia, the overall path of economic activity appears until recently to have been close to what the Board had expected, with a needed moderation in demand occurring after a period of earlier strength. Recent reductions in borrowing rates, the depreciation of the exchange rate and the fiscal stimulus announced in October will work to assist growth in the period ahead, but deteriorating international conditions and falling commodity prices will have a dampening influence. On balance, it appears likely that spending and activity will be weaker than earlier expected.

Consumer price inflation in Australia remained high in the September quarter. As expected, CPI inflation in year ended terms picked up to 5 per cent, while underlying measures were just over 4½ per cent.  Nonetheless, capacity pressures are now easing and, given the outlook for more moderate growth in demand and activity, it is reasonable to expect that inflation in Australia will soon start to fall. Global disinflationary forces will assist in this regard, though the depreciation of the exchange rate means that the decline of inflation to the target could take longer than would otherwise be the case.

Weighing up these international and domestic developments, the Board judged that a further significant reduction in the cash rate was warranted. The Board will continue to monitor developments and make adjustments as needed to promote sustainable growth consistent with achieving the 2-3 per cent inflation target over time."