After almost six months of investigations, Australia's corporate regulator ASIC has finally claimed a scalp - that of a 32 year old stockbroker, Richard Macphillamy, who emailed clients at the height of the market panic just 2 days after the collapse of Lehman's to warn of a run on Macquarie Bank's cash management trust (CMT).

The ban comes 12 months after ASIC announced Project Mint, designed to stamp out illegal market manipulation, and while they are themselves rumoured to be working on additional cases, there are some interesting aspects to the case.

ASIC stated that "in Macphillamy's favour is the fact that there is no evidence that he had any dishonest purpose or manipulative behaviour."  At the time, Lehmans had collapsed two days before, UBS had issued a downgrade on Macquarie a few weeks before, and JP Morgan issued a report the day after stating that Macquarie's model was "irretrievably broken."

No doubt the question will be asked in many brokers' offices what their job is, if not to inform clients about market "information"?  We suspect there will be a very fine line between information and rumour, and as John Durie of the Australian noted in today's edition "if the guy was just passing on the market gossip of the day, his penalty is too harsh - in fact you wonder why he was even hauled over the coals."

ASIC needs to find a party that has actually done what they are looking for - maliciously spreading rumours known to be false with the intent of profiting from the resultant price move.  And make sure it is enforced in both bull AND bear markets.

Absolute Asset Management's Asian REIT Property Fund lost -9.89% in February on lower global equity markets, outperforming the Bloomberg Asia REIT Index by +6.64%.

Only the Malaysian Amanah Harta Tahah 2 (up over 20%) and the Ascendas India Trust reported gains during the month. The Fund continued to decrease its exposure to Australian REITs, as the sector outlooks remains negative, thus increasing the Fund's cash holdings. The manager however believes the Asian REIT sector remains undervalued, with dividend yields ranging between 10% and 17%, and therefore represents excellent long term value.

Absolute's other funds, the Macro Diversified Fund and Absolute Trading 1 Fund, both performed significantly better in February than the REIT Fund, down -2.43% and up +0.58% respectively.

The Allard Growth Fund lost -6.6% in February, while the Allard Investment Fund was down -7%. As equity long only funds both were badly affected by ongoing weakness in Asian equity markets.

These results bring the 12 month return for the Growth Fund to -34.9%, and the Investment Fund to -11.9%. The manager noted that internet based businesses the Funds were invested in are increasing their market share over their non-internet based rivals, a Korean internet content service operater for example reporting an operating profit up +26%. Another trend has been the increasing pressure on smaller, weaker players in the Hong Kong and Chinese manufacturing industries. The manager will continue to monitor these trends to identify entry points for investment.

The BlackRock Asset Allocation Alpha Fund (Class D) was up +1.85% in February, the seventh consecutive month the Fund has recorded a positive return.

This result brings the Fund's three month return to +4.86% and 12 month return to +29.76%. The main driver of returns was the Fund's equity/cash strategy - short positiions in US, German and Australian equities, while currency strategy (incorporating short positions in AUD and NZD) detracted from performance. The manager continued to favour a risk averse stance, focusing on short equities (48% of portfolio risk), long bonds (33%) and short commodities currency strategies (14%).

The Prime Value Growth Fund lost -2.4% in February, and is down -4.7% over the last three months. The Prime Value Imputation Fund posted a larger loss of -4.1%, and is down -11.8% over three months.

An overweight position in industrial stocks in both funds, including BHP and CSR, weighed on performance. The significant cash holdings in both funds and an underweight positions in financials partially offset this weakness. In more positive news, the manager reported that the Growth Fund continued to enjoy net inflows in February, and both funds' higher than normal cash holdings have put them in a strong position to take advantage of future opportunities.

The Denning Pryce Equity Income Fund lost -3.02% in February, and is down -22.95% for the last 6 months.

Small gains in consumer staples and energy short equity positions were offset by significant losses in long positions in industrials (-1.46%), REITs (-0.67%) and financials ex-property (-0.36%). The Fund however still outperformed its benchmark, the S&P/ASX 50 Accumulation Index, which was down -4.01% in February and lost -30.37% in the past 6 months.

The Blue Sky World Fund recorded an impressive +6.25% gain in February, due to strong returns in its Asian Pacific equities (+5.16%) and index futures (+6.26%) positions.

Negative returns in FX and North American equities partially offset February's return. This result brings the Fund's 2009 return to +3.39%, after it posted a loss of -3.96% in 2008. The Fund ended February with significant short exposures in equities and equity index futures, a small long exposure in commodity futures and no exposure on currency futures.

The Excalibur Absolute Return Fund was up +1.77% in February, following a gain of +0.54% in January, bringing the Fund's 2009 return to +2.33%.

Excalibur noted that, although conditions are still challenging, current volatility levels are ideal for obtaining consistent returns without taking on unnecessary risks or leverage.

The manager also reported that the Fund's return for March is also looking positive. These impressive returns come after a gain of +12.23% in 2008 in extremely difficult market conditions.

The MQ Asia Long Short Fund, managed by Macquarie, was down -1.06% in February to bring 2009 YTD return to +0.28%.  Over the longer term, the fund returned -6.16% over 12 months, against a benchmark of the MSCI Asia Pacific index which lost 44.33% over the same period.

Interestingly MQ Asia recorded a net inflow of funds in February, following on from heavy net outflows between October and December last year, indicating renewed confidence from investors may be returning.

In the Fund's monthly report the manager also provided weighting and exposure breakdowns by stock and region, as well as in depth risk statistics. The hedge fund industry is often criticised for a lack of transparency, however managers such as MQ have consistently refuted this claim by providing such detailed fund information to the public.

The Wilson Investment Fund lost -3.68% in February, while WAM Active Ltd was up +0.60% and WAM Capital Ltd gained +1.10%. The 2009 returns for these funds now stand at -10.32%, -1.33% and -0.44% respectively.

Both WAM Active and WAM Capital remained lightly invested in February, with cash levels around the 70-80% mark. WAM Active also participated in a number of placements, including Lend Lease, IAG and Newcrest, and significantly reduced its exposure to the financial sector.

The Wilson Investment Fund ended February heavily weighted towards equities, particularly banks and diversified financials, with only 21% invested in fixed interest and cash.