Australia's Corporate regulator, ASIC has flagged a wide ranging plan to improve corporate governance and compliance in a number of areas, including suspected market manipulation, rating agencies' conflicts of interest, and Listed Investment Schemes. At the same time ASIC has flagged it will closely monitor company briefings given to analysts to ensure they do not breach disclosure laws.

All these issues are already covered elsewhere by ASIC, but the announcement will give some much needed focus to areas which in the past have avoided much scrutiny. Although recent market turmoil has resulted in the announcement, the response is both welcome and overdue, particularly the spotlight which will be shone on the role of Credit Rating Agencies and the glaring conflicts of interest which have been allowed to flourish with such disastrous results over the past 12 months.

Regal Funds Management's Amazon Market Neutral Fund recorded a fall of 7.63 per cent in July, however healthy returns over the last few months still leave a positive return of 6.22 per cent for the year so far. By comparison the ASX200 lost 4.6 per cent in July and is down 10.3 per cent over the last six months.

Most disappointing for the manager was mis-timing adjustments to the portfolio, including cutting short positions in ANZ and NAB only days before they both announced significant increases in their bad debt provisions which saw both stocks lose around 20 per cent.

Amazon, a Cayman based Market Neutral fund open to wholesale investors only, returned +32% in 2007, and 42% in 2006 for an annualised return post all fees of 34.43% since inception in September 2005. Investing mainly in Australia, with some opportunistic positions mainly in Europe, Amazon does not invest in emerging markets.

Regal Funds Management was established by Andrew King in January 2004 following experience with local boutique manager Paradice Investment Management.

A slump in new housing loans has added to the case for a reduction in official interest rates when the Reserve Bank of Australia meets again at the beginning of September. Over the first six months of this year the volume of new loans has fallen by 25 per cent, the worst result since 1989. The highest mortgage rates in 12 years have seen the level of home loans fall for five consecutive months, with owner occupied loans down 29.5 per cent and investment loans 32 per cent lower than in June last year.

Commodity prices fell sharply yesterday, dragging high profile resources stocks down with them. Analysts say that investors are deserting the sector as fears grow that the boom is over on the back of news that manufacturing in China contracted during July for the first time since 2005. Oil dropped below $US120 a barrel on Monday night, copper is at its lowest level for the last six months while gold and silver have both fallen to six-week lows. Shares in BHP Billiton fell to their lowest level in four months and Rio Tinto saw its shares fall to their lowest in five months. Also fueling the slide were rumours that a hedge fund had started to liquidate its commodity investments.

The ASX has reported that the number of cash market trades in July hit a new record of 10.2 million, 67 per cent higher than for the same month last year. However the total value of trades in the month was only $126.8 billion which was 11 per cent lower than July 2007, with the average value of each trade dropping to $12,388 compared with $23,132 last year.

The Reserve Bank has chosen to leave interest rates as they are at its August meeting, despite increasing evidence of a significant slowdown in many measurements of economic activity. A statement by the bank's governor, Glenn Stevens, acknowledged that household spending has been subdued over recent months, while business activity has softened and labour market conditions have started to ease. However, the latest Consumer Price Index figures reported so far have done little to diminish the central bank's concerns about inflation, with improving terms of trade adding to national income and spending power. After considering both domestic and international conditions the RBA decided to leave the cash rate unchanged at 7.25 per cent, but indicated that the probability of reducing rates in the months ahead is increasing.

ATTACHED FILESRBA Statement - August 2008 (pdf format)

Veteran of the funds management industry, Ian Macoun, says that fund managers are in for a shakeup following the recent sharemarket volatility. Macoun, managing director of Pinnacle Investment Management, said that both research houses and superannuation funds are reviewing their lists of managed funds to remove poor performers. According to Macoun, Pinnacle has seen increased levels of interest from superannuation funds looking at managers of alternative funds. He expects the number of boutique firms to grow and Pinnacle has been approached by teams at large institutions looking to change company. Macoun expects that private equity will once again become popular as will vehicles that aim to outperform their benchmark, concentrated and quantitative funds.

Select Asset Management's Futures Fund has reported a positive performance of 7.84% for June 2008, bringing cumulative YTD performance since January 2008 to 18.46%, and an annualised performance since inception in March 2007 of 21.8% net of all fees.

The Fund reported positive contributions overall from each sector of the Fund, but performance was particularly driven by the agriculturals, energies and stock indices sectors. Select noted that the weakening US economy benefited their predominantly short positions in US stock indices and European market sectors, whilst long positions in grains and natural gas both performed well.

The Select Futures Fund is a systematic (quantitative) global futures trading program managed by London based Aspect Capital. The Fund is structured as an Australian resident open ended unit trust operated as a registered managed investment scheme.

The Saltbush Amalg Market Neutral Fund has reported a negative result for June 2008, bringing the YTD result to a negative 7.86% after all fees. This compares with a decline of 7.8% for the ASX200 for June, and falls of 17.1% since January.

Saltbush's monthly report noted that since the sell off in Australian equities commenced in November 2007, 70% of ASX200 stocks have fallen by greater than 20%, and 30% of ASX200 stocks have declined by over 40%. Against these statistics the Saltbush Amalg fund has declined less than 7% since November 2007.

The Saltbush Amalg Fund is an Australian domiciled equities fund established in January 2004 which invests in Australian equities utilising a medium term strategic portfolio combined with active tactical and derivative overlays. The Fund's objective is to deliver net absolute returns of 12-15% pa regardless of market direction with low risk market exposure and volatility of returns.

Regal Funds Management's Amazon Market Neutral Fund has continued recent impressive returns with a positive performance of 6.28% after all fees for June, bringing YTD performance (since January 2008) to +14.97%, against the ASX200 which recorded a monthly decline of 7.8% and a decline of 17.1% YTD.

Understandably profits were made on the short side (+12%) particularly in the Financial sector, whilst long positions lost 5% in total.

Amazon, a Cayman based Market Neutral fund open to wholesale investors only, returned +32% in 2007, and 42% in 2006 for an annualised return post all fees of 34.43% since inception in September 2005. Investing mainly in Australia, with some opportunistic positions mainly in Europe, Amazon does not invest in emerging markets.

Regal Funds Management was established by Andrew King in January 2004 following experience with local boutique manager Paradice Investment Management.