13 Nov 2008 - Performance Review for October 2008 (Preliminary)

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%.