Factbox-Hedge funds jump into volatile January to reap returns

Hedge funds globally achieved positive returns in January 2025, capitalizing on market volatility triggered by U.S. military action in Venezuela, uncertainties surrounding the Federal Reserve's independence, and a severe cold snap that propelled natural gas futures to unprecedented heights. The sector saw a 2.2% performance increase, as reported by JPMorgan, slightly below the 2.5% returns from the previous year when hedge funds benefited from crowded positions in U.S. equities and avoided significant losses from the rise of Chinese AI model DeepSeek. Stock pickers trading long and short positions in global equities gained 2.7%, while multi-strategy hedge funds returned between 1.6% and 3.2%, and quantitative hedge funds were likely down around 1% in aggregate. The U.S. captured Venezuelan President Nicolas Maduro on January 3, leading to a deal to export up to $2 billion worth of Venezuelan crude to the United States. Investors increased bets on higher long-dated Treasury yields and a steeper yield curve following the announcement of Kevin Warsh as the new Federal Reserve Chair, chosen by U.S. President Donald Trump. Additionally, natural gas futures surged 140% between January 20 and 28 due to extreme cold in the United States, boosting heating demand to near-record levels and providing ample trading opportunities for hedge funds. Notable multi-strategy funds like Balyasny, Citadel, and Point72 returned between 1% and 3%, with Citadel and Point72 declining to comment on the figures.