Finance
Factbox-Hedge funds jump into volatile January to reap returns
Published by Global Banking & Finance Review®
Posted on February 5, 2026
2 min readLast updated: February 5, 2026
Quick Summary
Hedge funds capitalized on January's market volatility, driven by geopolitical events and natural gas price surges, to achieve positive returns.
Hedge Funds Capitalize on January Market Volatility for Gains
Hedge Fund Performance in January
By Nell Mackenzie
Factors Driving Market Volatility
LONDON, Feb 4 (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 flying.
Performance of Multi-Strategy Funds
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.
Impact of Natural Gas Prices
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)
Key Takeaways
- •Hedge funds saw positive returns in January due to market volatility.
- •U.S. military action in Venezuela influenced market conditions.
- •Natural gas futures surged due to extreme cold in the U.S.
- •Multi-strategy funds returned between 1% and 3%.
- •Investors bet on higher long-dated Treasury yields.
Frequently Asked Questions about Factbox-Hedge funds jump into volatile January to reap returns
1What is a hedge fund?
A hedge fund is an investment fund that employs various strategies to earn active returns for its investors. They often invest in a range of assets and can use leverage and derivatives.
2What is market volatility?
Market volatility refers to the rate at which the price of a security increases or decreases for a given set of returns. High volatility indicates a risky investment.
3What are multi-strategy funds?
Multi-strategy funds are investment funds that employ various strategies to diversify their investments and reduce risk. They can invest in different asset classes and strategies.
4What are natural gas futures?
Natural gas futures are contracts to buy or sell natural gas at a predetermined price at a specified time in the future. They are used for hedging or speculating on price movements.
