Millennium Management, Citadel and other top hedge funds posted lackluster returns in February, as market gyrations reversed momentum on key trades and clobbered popular stocks.
Multistrategy firms with an equity market-neutral bias took some of the biggest hits. Those losses were driven by overcrowding in a small group of stocks, particularly health care and technology.
Jain Global fell about 1%, according to a person familiar with the matter. Millennium lost 1.3% and Citadel dipped 1.7%.
The PivotalPath Multi-Strategy Index rose 0.2% in February.
President Donald Trump continued to stoke market unrest last month with tariff threats, just as inflation rose more than expected and added another layer of uncertainty to equities. A major money-losing strategy was index rebalancing, when traders bet on whether companies will be added or removed from an index on a quarterly or semi-annual basis.
The volatility in late January that persisted into February “drove lots of questions around hedge fund performance,” JPMorgan Chase & Co. analysts wrote in a note to clients. The analysts added that crowding in technology, media, telecom and some consumer names yielded “pockets of painful performance.”
The S&P 500 Index fell 1.4% during the month, and was up just 1.2% for the year through February, lagging behind the Euro Stoxx Index and the MSCI China Index by more than 10 percentage points in the first two months of