Blue Fin Capital, which specialises in trading spot foreign exchange markets and commodity futures using a quant trading strategy, has reported -1.03% for November and +9.48% YTD for the commodities strategy, and -3.80% and +8.48% YTD for the FX strategy.

In a statement to the ASX, the listed absolute return fund HFA Accelerator Plus Limited (HAP) has announced an Asset Realisation Program in which it will redeem all of its leveraged instruments (i.e. notes and swaps). HAP is undertaking the program in order to protect shareholder value in the current environment.

HAP stated: "The HAP investment model is predicated on leveraging HAP's capital 3 times as an investment in the Lighthouse Diversified Fund, a diversified offshore fund of hedge funds.

The HAP model was designed to provide superior returns in a wide variety of hedge funds with different investment strategies. The model was successful during periods of high capital market liquidity and market confidence in the global economy. However, the HAP model has underperformed during the sustained deterioration of global capital markets over the past 12 months."

HAP is listed in the AFM database under a Global Diversified strategy and recorded a return of negative 20.89% in October bringing its year-to-date (YTD) return to negative 52.79%.

To read the full statement, click here.

The Reserve Bank issued the following statement at 14:30 AEST Tuesday 2nd December 2008:

"At its meeting today, the Board decided to reduce the cash rate by a further 100 basis points, to 4.25 per cent, effective 3 December 2008.

Recent actions by governments and central banks to stabilise their respective financial systems have begun to take effect. Nonetheless, financial market sentiment remains fragile, as evidence accumulates of weak economic conditions in the major countries and a significant slowing in many emerging countries. Commodity prices have fallen further. This, combined with the likelihood of below-trend growth in the global economy, suggests that global inflation will moderate significantly in 2009.

The Australian economy has been more resilient than other advanced economies, but recent data nonetheless indicate that a significant moderation in demand and activity has been occurring. With confidence affected by the financial turbulence and a decline in the terms of trade now under way, more cautious behaviour by both households and businesses is likely to see private demand remain subdued in the near term. With that outlook, and with capacity pressures now easing, it is likely 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 have been the case.

Weighing up the international and domestic developments of recent months, the Board judged that a further significant reduction in the cash rate was warranted now, to take monetary policy to an expansionary setting. As a result of today’s decision, the cash rate will be at its previous cyclical low point. Given trends in money market yields, most lending rates should fall significantly and will also reach below-average levels.

There has now been a major easing in monetary policy over the past few months. Together with the spending measures announced by the Government, and a large fall in the Australian dollar exchange rate, significant policy stimulus will be supporting demand over the year ahead. 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."

October was another difficult month for Australia's Absolute Return and Hedge Fund sector with widespread deleveraging across the globe and across almost every investor group and asset class.

The average October return of single managers across the sector was negative 5.04% with 86% of single managers’ funds having reported to date. This made October the worst month this year for the sector. On a year-to-date (YTD) cumulative basis the performance of the average Absolute Return fund in the database is negative 12.30%.

Positive returns were achieved by 28% of the sector while 81% of the sector outperformed the benchmark S&P/ASX200 Accumulation Index. The ASX200 fell 12.61% for the month, and according to Mercer Investment Consulting the median Long Only fund lost 11.3% in October, and 35.7% over the past 12 months.

To read the full report download the file below.

Wallace Absolute Return Limited, an ASX Listed Investment Company (LIC) recorded a negative return of -2.47% for October, bringing 12 month performance to -18%.

Meanwhile the Wallace Australia Opportunities Fund, a Cayman based unlisted fund using broadly the same Equity Market Neutral strategy, returned a positive 8.15% and 36% over the past 12 months.

The Asia-Pacific Asset Management Asia fund returned 18.21% in October to take year-to-date performance to +11.69%.

The manager noted in their monthly report that they made gains on the currency through an active hedge strategy although the underlying managers in the fund had also performed well in difficult conditions during October.

Meanwhile the Asia-Pacific Asset Management Australian Fund returned -0.77% for the month and -5.03% year-to-date.

Both funds are open to retail investors in Australia.

Kenny Arnott's Arnott Opportunities Fund, an Equity Long Short fund investing primarily in Pan Asia, returned 0.34% in October, bringing YTD performance to +4.35%.

Arnott's October performance report indicated a move towards risk free arbitrage deals during the month as a method of navigating successfully through current markets. They also noted that there was a reduction in competitive activity from both other funds, and also from investment bank's proprietary desks, which have been winding leverage back from up to 50 times to a more manageable 10 to 20 times.

The Arnott Opportunity Fund has US$780m in funds under management and was established in November 2005.

Eclectic Capital Management, a Melbourne based Equity Long/Short manager established in 1999 has closed as at the end of September,and returned all funds to investors.

Eclectic's performance to the end of September was -4.2% YTD, well above the benchmark of the ASX200, and broadly in line with the AFM Hedge Fund Index. However, Eclectic's August performance report noted that "investing in this market is like driving a land cruiser down the Nullabor and hitting rumble strips. You can get through but it's not much fun, and it's not good on the nerves."

AMP Capital's Total Return Fund, a leveraged, Multi Strategy, Global Fund of Funds with $979 million in funds under management, returned -13.21% in October, bringing 2008 YTD performance to -18.61%.

The Manager reported that the majority of underlying strategies in the fund experienced losses in October due in part to continued liquidation occurring in hedge funds globally. In particular managers in the leveraged loan market, distressed, special situations and macro strategies all contributed to the losses. On the positive side were commodity strategies and some sector specialist funds.

AMP reported they were reducing exposures to various strategies to lower risk, whilst also noting that they have adjusted their Australian dollar hedge position to act as a buffer against negative manager performance.

The BlackRock Asset Allocation Alpha Fund returned 8.17% to investors in October, continuing what has been a successful year to date, returning over 30%.

The fund which was formerly known as the Merrill Lynch Asset Allocation Alpha Fund, noted positive influences on performance included bonds/cash, currencies and equities, reflecting the long US large cap versus US small cap, and long US growth versus US value.

Looking forward, the manager noted that there is now a risk that the global economy faces deflation in the next 12 to 24 months on the heels of a severe global recession. They also noted that equity markets usually reached their lows 3 to 6 months before the end of the recession, and with their negative view in that regard, feel that it is likely to be still too early to buy.