The Reserve Bank of Australia released the minutes of its most recent board meeting held on November 4, at which they handed down the decision to cut official rates by 0.75% to 5.25%.

The five pages of minutes made for gloomy reading, with hardly any positive indicators noted either in Australia or overseas. As such it was hardly any wonder that the board cut rates by 75 bps -- maybe the real surprise was that they didn't go further.

All eyes will now be on the Reserve's next meeting due to be held on Tuesday, December 2. As the Board does not usually meet in January, they will need to make a decision then to carry through Christmas and the January holiday period.

No one in the market will be surprised to see a further 75 bps, or even a full 1% cut at that stage, given that the outlook described in the board's minutes does not seem to be improving.

Antipodean Capital, an Australian Quantitative Fundamental manager of FX, CTA and Volatility, has reported a positive return of 5.4% for its Currency strategy, -0.87% for the CTA, and -1.70% for the Global Volatility Arbitrage.

2008 YTD results are +2.19%, -5.99% and +9.49% respectively.

Antipodean's Craig Ferguson noted that leverage had been reduced across all three strategies to reduce risk, given the extreme volatility in all markets. In the A$ Currency Strategy profits were made no short positions on the way down as well as long positions as the dollar recovered.

Antipodean Capital has a track record since February 2006, and an annualised return in the Currency strategy of 10.98%. The CTA strategy was established in August 2006 and has returned an annualized 21.78%, while the Volatility Arbitrage Strategy was established in December 2007 and has returned 22.60% annualised.

The federal government has presented a revised bill to parliament which will permanently ban naked short selling. An interim ban on all forms of short selling (with certain exceptions) has been in place since 21 September 2008 but ASIC has announced, as planned, it will lift its ban on the short selling of non-financial stocks from 19 November 2008. The ban on covered short selling of financial stocks remains in place until the 27 January 2009.

In conjunction with this legislation the industry regulator ASIC, together with the market body ASX, has outlined the reporting and disclosure framework for the practice of covered short-selling. There has been much discussion in the media that this framework is inadequate in that it only requires the reporting of daily gross short sales. In effect this will not indicate the aggregate number of short sold positions with the buy-back of stock to close out the short positions being taken into account.

In relation to this issue, the Australian arm of the Alternative Investment Management Association (AIMA) has stated that: "Interim measures designed to only capture daily trade data will give no transparency into the size of the short interest in a listed company, or the rate of change in the short interest. Reporting small daily trade data will significantly distort the actual shorting activity in a company's stock as it fails to disclose position size and its implied impact on the stock's price behaviour."

To read the full ASIC Statement, click here.

Fortitude Capital's Equity Market Neutral funds continued their positive performance in October, returning +3.12% for the onshore fund, and + 2.35% for the Cayman fund, bringing YTD 2008 performance to 11.64% and 7.75% respectively.

Given the market's (ASX200) performance of -12% for October and a continuing restriction on short selling, Fortitude's performance is undoubtedly positive. The fact that Fortitude's onshore fund has yet to record a negative month this year is almost unique, even amongst absolute return funds.

Fortitude's onshore fund has close to a 4 year track record, and has achieved positive returns in 41 out of 44 months.

Absolute Return funds surveyed by AFM have started to report their October results and preliminary analysis indicate it was another difficult month for the industry with quite diverse results. To date the average return for the month is -3.54% (based on 35% of funds in AFM's database having reported) compared to September's average result of nearly -5%.

The best performing strategies have been non equity based (i.e. Commodities, Currencies and Managed Futures). Equity based strategies have suffered but still on average outperformed the underlying equity benchmarks with the S&P/ASX200 Accumulation Index ending down 12.61% for the month and the S&P500 Total Return Index down 17%.

At an individual fund level, the best result reported has been Argus Capital Management Pty Limited with their Dynamic Multi-Strategy Program returning 11.77% in commodities. Fortitude Capital continues its unequalled record of positive returns every month this year achieving 3.12% for October in it Absolute Return Trust using an equity market neutral strategy.

Australia's Absolute Return and Hedge funds continue to outperform their Equity Fund peers. As reported in the Australian Financial Review, "the median [equity] fund posted an 11.3 per cent loss in October, bringing losses over the past 12 months to 35.7 per cent according to Mercer Investment Consulting." It was further reported, the best equity fund return for October was negative 6.1% while the worst return was negative 18.3%.

Wallace Australia Opportunities Fund, a Cayman based Equity Market Neutral Hedge Fund with a 3 year track record, has overcome the worst equity market performance since October '87 and restrictions on short selling to return investors 8.15% for October, (preliminary results) bringing YTD 2008 results to +39.9%.

All profits were made in the long/short portfolio which returned +8.87%, whilst the Event Driven portfolio recorded a small loss of -0.72%.

The fund was established in October 2005 and has returned 21.62% annualised over its three year track record. Wallace also manages an Australian Listed Investment Company (LIC).

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%.