In October, global equity markets reflected investors' concerns, with the S&P500 falling -6.84% and flowing through to the ASX200, which also dropped -6.05% for the month. On top of September's decline of -1.26%, it was a case of thank goodness it's now November, and to date at least, a return to some kind of stability.

With only just over 20% of October funds in AFM's database having reported so far, there have been the usual wide range of results. Of those that have reported, just over 50% outperformed the ASX. Meanwhile only 10% have provided positive returns, with those not surprisingly dominated by fixed income, credit or managed futures funds, and NWQ's new global liquid alternatives fund of funds leading the way with a positive return of +3.51%. Other results catching our attention included Harvest Lane's Absolute Return Fund and ARCO's Absolute Trust, which fell only 0.11% and 0.68% respectively. While both results were marginally negative, it is unlikely their investors would have been overly disappointed.

Over 12 months to the end of October the ASX is now in negative territory, with many funds matching that, emphasising the point we always make that averages can be deceptive, and careful fund selection - and diversification - is vital!

Meanwhile this week, to nobody's surprise the RBA kept rates on hold, saving the property market from further stress. As usual there are those who are forecasting further falls, and others who take a more positive view, which we suppose is what makes a market!

Hedge Clippings is probably more in the glass half empty camp on property prices, although there is no single residential market in Australia, with a range of conditions in individual suburbs across each city that vary dramatically. In some, such as units away from the CBD, there have already been reports of falls in values of 30%, most probably reflecting a combination of oversupply and tightening of lending standards by the big banks. Elsewhere, where the supply and demand are more balanced, quality will no doubt prove the difference.

Our concern is this:  IF (ok, it's an IF) the economy falters in 2019 - possibly as a result of a change of government, and therefore policy changes such as the removal of franking credits, negative gearing, the final outcome of the Hayne RC, or simply a fear of the unknown - the housing market will fall further. If so, consumer confidence will fall with it, and the RBA will have little room, or the option, to cut rates.