Factbox-Hedge funds jump into volatile January to reap returns

By Nell Mackenzie

LONDON, Feb 5 (Reuters) – Hedge funds posted positive returns in January thanks to ripples of market volatility stemming from U.S. military action in Venezuela, questions around the independence of the Federal Reserve and a cold snap that sent natural gas futures sharply higher.

Performance globally rose by 2.2% in January, according to a JPMorgan client note dated Monday and seen by Reuters on Wednesday.

That compares with returns of 2.5% last year, when hedge funds profited from crowded positions in U.S. equities and managed to avoid getting stung by a hefty selloff sparked by the rise of Chinese artificial intelligence model DeepSeek.

Stock pickers trading long and short positions in global equities posted a gain of 2.7%, while hedge funds trading many different strategies under one roof returned between 1.6 and 3.2% and quantitative hedge funds were likely down around 1% in aggregate, the note said. 

The U.S. captured Venezuelan President Nicolas Maduro on January 3, after which the two countries reached a deal to export up to $2 billion worth of Venezuelan crude to the United States. 

Investors have ramped up bets on higher long‑dated Treasury yields and a steeper yield curve after incoming Federal Reserve Chair Kevin Warsh was announced as U.S. President Donald Trump’s pick to lead the central bank. 

And separately, natural gas futures soared 140% between January 20 and 28 as extreme cold in the United States boosted heating demand to near-record highs.

This gave hedge funds lots to trade. Some of the biggest multi-strategy funds like Balyasny, Citadel and Point72 returned between 1% and 3%. Citadel and Point72 declined to comment on the numbers. 

(Reporting by Nell Mackenzie; Editing by Amanda Cooper, Aidan Lewis and David Holmes)