Hedge funds are cashing in some of their chips after enjoying a bumper first quarter, wary that a sudden change in market sentiment could see them take the sort of losses suffered in last year\'s volatile markets. Hedge funds returned 5 per cent in the first two months of the year, the best start to a calendar year since 2000 according to Hedge Fund Research, as the European Central Bank\'s €1 trillion (Dh4.87 trillion) cash injection boosted assets across the board. Some star names recorded huge gains. Crispin Odey\'s Odey European fund gained 21.1 per cent and Johnny de la Hey\'s Tosca fund rose 13.7 per cent to mid-March, while Michael Hintze\'s $1.4 billion CQS Directional Opportunities fund was up 13.9 per cent to end-February. Many managers remain positive on markets, but in a number of cases have opted to trim their bets, influenced by sharp volatility last year during the Eurozone debt crisis that saw the average fund lose 5.3 per cent and some more bullish funds take much bigger losses. Over the last week or so we\'ve actually seen [risk] come off a bit,\" said Paul Harvey, European head of sales in prime finance at Citi. \"We all want this rally to continue but we are all relatively cautious about the broader macroeconomic environment and the political environment, and uncertainty certainly prevails.\" Many managers came into this year with low levels of risk, missing out on the start of the rally after underestimating the impact on markets of the ECB\'s so-called Long Term Refinancing Operations, designed to avoid another credit crunch. Main worries CQS\'s Australian founder Hintze is among those to have struck a more cautious tone recently. In his February investor report he wrote: \"We remain broadly constructive on markets but are mindful of potential volatility that could arise due to the ongoing macro uncertainty.\" Managers are worried the Eurozone debt crisis could flare up again, that China\'s economic growth is slowing, and that tensions between Iran and the West could lead to further gains in the oil price that could reignite inflation. David Stewart, chief executive of Odey Asset Management, told Reuters the firm remained bullish on equities, preferring them to credit. But he added: \"When the market has had a good run then you often trim a bit. We haven\'t changed our view. We know it\'s going to be difficult ... Equities are the right place to be.\"