Top U.S. hedge funds face "Black February" as the "East rises and West falls" pattern continues to strengthen

Zhitong
2025.03.07 06:40
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Due to market volatility reversing the momentum of key trades, top hedge funds such as Millennium Management and Citadel had a lackluster performance in February. Multi-strategy firms suffered the largest losses, particularly in healthcare and technology stocks. The S&P 500 index fell 1.4% for the month, with a year-to-date gain of only 1.2%. Major macro hedge funds were also affected, with the Haidar Jupiter Fund down 6.3% and Brevan Howard's BH Master Fund down 1.6%

According to Zhitong Finance APP, due to market volatility reversing the momentum of key trades and severely impacting popular stocks, the returns of Millennium Management, Citadel, and other top hedge funds were lackluster in February.

Multi-strategy firms employing a market-neutral stock strategy suffered the largest losses. These losses were caused by a small number of stocks, particularly in healthcare and technology, becoming overcrowded.

According to informed sources, Jain Global fell approximately 1%. Millennium dropped 1.3%, and Citadel declined 1.7%.

The PivotalPath multi-strategy index rose 0.2% in February.

Last month, President Trump continued to stir market turmoil with tariff threats, while inflation rates rose more than expected, adding another layer of uncertainty to the stock market. Index rebalancing is a major loss strategy where traders bet on whether companies will be added to or removed from indices on a quarterly or semi-annual basis.

JP Morgan analysts noted in a report to clients that the volatility from the end of January into February "raised many questions about hedge fund performance." The analysts also added that the influx of technology, media, telecommunications, and some consumer goods stocks led to "poor performance for some funds."

The S&P 500 index fell 1.4% for the month, with a year-to-date increase of only 1.2% as of February, lagging behind the Eurozone Stoxx index and the MSCI China index by more than 10 percentage points in the first two months of the year.

This turmoil also affected major macro hedge funds.

Said Haidar's Haidar Jupiter Fund fell 6.3% in February but is up 8.6% year-to-date. Brevan Howard's BH Master Fund dropped 1.6% in February, down 4.5% since January 1. Its BH Alpha Strategies performed relatively well, rising 0.7% in February and up 2.25% year-to-date.

The Seven Tech Giants Fall from Grace

The so-called "Seven Tech Giants" that have driven hedge fund returns in recent years are facing setbacks as investors question the valuations of these companies and their massive investments in artificial intelligence. In contrast, European stocks have performed better, and Chinese stocks are soaring.

Goldman Sachs reported that some U.S. funds focused on stocks also faced multiple strategy impacts, with clients using this strategy averaging a decline of 1.4% in February. In comparison, their Asian counterparts averaged a rise of 1.9% this month, while European funds rose 0.5%.

Balyasny Asset Management, managing $22 billion in assets, saw the largest increase among large multi-manager asset management firms, rising 0.9%. Singapore's Dymon Asia Capital, managing approximately $3 billion in assets, rose 1%

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