Market volatility in February dealt a blow to several major hedge funds, including Millennium Management, Citadel, and Jain Global, as crowded trades and unexpected macro shifts disrupted key strategies, according to a report by Bloomberg.
Multi-strategy hedge funds with an equity market-neutral bias suffered some of the biggest setbacks, particularly those overweight in technology and healthcare stocks, its Jain Global down 1%, Millennium Management losing 1.3%, and Citadel dropping 1.7%.
A key factor in February’s turbulence was index rebalancing strategies, where traders bet on quarterly or semi-annual changes to stock indices. The strategy turned money-losing in February amid shifting investor sentiment.
The downturn also impacted major macro hedge funds. Haidar Jupiter Fund slumped 6.3%, though it remains up 8.6% year-to-date, while Brevan Howard’s BH Master Fund lost 1.6% in February and is down 4.5% for 2025.
Brevan Howard Alpha Strategies, however, gained 0.7%, bringing its year-to-date return to 2.3%.
The backdrop of rising inflation and geopolitical uncertainty, including tariff threats from former President Donald Trump, further exacerbated market volatility.
The so-called Magnificent Seven tech stocks — long a favourite of hedge funds — lost steam in February, as concerns mounted over valuation and AI-driven spending. Meanwhile, European and Asian markets outperformed US equities, with hedge funds focused on Asia gaining 1.9% on average, according to a Goldman Sachs note.
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