News of the decision by New York based Ospraie management to wind down its commodities based hedge fund could be causing some anxiety for local resource companies. Ospraie has reduced its holding in Iluka from 10.8 to less than 5 per cent over the last few months, but still holds 14.7 per cent of Mineral Deposits, 19.5 per cent of both Great Southern and Consolidated Rutile. A US service that can be used to work out who owns what says that there are at least 10 listed Australian companies whose share prices will come under pressure as the fund is unwound.

The 2008 Alternative Investment Management Association (AIMA) Awards were held in Sydney on Thursday 4th September recognising achievement and excellence within the Australian hedge fund industry.

The awards were well attended by industry participants and coincide with the annual Hedge Funds Rock charity evening supporting Cure Our Kids in raising funds for the Oncology Unit at Westmead Children's Hospital.

Over 200 funds were judged from which 15 finalists were chosen across 8 categories.

The Australian Hedge Fund of the Year was awarded to Fortitude Capital Absolute Return Trust, a multi-strategy market neutral fund specialising in Australian listed equities and derivatives.

Other awards included Mathews Capital Sabra Fund Best Long Short Absolute Return Fund; Bennelong Long Short Fund Best Market Neutral Fund; Kaiser Trading Fund SPC Best Global Macro/Futures Fund; Kapstream Absolute Return Income Fund Best Emerging Manager; and Investor Select Advisors Global Opportunity Best Fund of Funds.

TelstraSuper was rated the Best Investor Supporting Australian Managers and Kim Ivey, the Chairman of the Australian Chapter of AMIA, was recognised for his long-standing contribution to the Australian Hedge Fund Industry.

As speculated late last week, Ellerston GEMS Fund will put a proposal to its unit holders next month recommending that the fund be delisted from the sharemarket. In a press release the company says that shareholders will be able to progressively redeem units at a price equal to a 7.5 per cent discount to the then NAV. Ellerston Capital's chief executive officer, Glenn Poswell, said that the move is a win-win for unit holders to unlock value now compared to the price the market has been prepared to trade their units.

Listed investment company Ellerston GEMS is expected to be delisted after a shareholder campaign. EGF listed last year at $2.50 per unit and at the end of June had a net asset value (NAV) of around $2.40 per unit but, like many listed investment trusts, has been trading at a discount, closing yesterday at $1.78.

Shareholder John Dalley, who owns 1.35 per cent of the trust, sent letters to other unit holders seeking support for his calls to wind up the fund saying that he expects they would be able to realise about $2.33 per unit if it occurred now. It is believed that he succeeded in getting the required additional 99 unit holders to support his motion.

Challenger Financial Services is added to its range of boutique fund managers, buying stakes in a new fixed interest manager and a hedge fund manager. Challenger will own 30 per cent of a fixed interest boutique that will launch later this year and has bought 27.5 per cent of the Australian equities hedge fund manager WaveStone Capital.

WaveStone was established in September 2006. Challenger will provide the manager with seeding for a new offshore absolute return fund based in the Cayman Islands which will push WaveStone's total funds under management past $100 million.

Australia's Absolute Return and Hedge Fund managers significantly outperformed both local and overseas equity markets in the first half of 2008, with over 80% achieving better returns than the ASX200, and 36% achieving a positive return after fees.

The average cumulative return of all Australian Hedge funds in the six months to June 2008 was -3.64%. Collectively on average they outperformed the ASX200 benchmark by almost 18%.

For a full copy of the report, which covers distribution of returns by Manager type, strategy, asset class, monthly volatility, investor type, fund domicile and geographic mandate, download the file below.

ATTACHED FILESAbsolute Return & Hedge Fund Performance Review YTD June 2008 (pdf format)

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.

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.