• Four months into 2019, equity investors have enjoyed a steady upward rise as the S&P 500 Index climbed more than 4% in April and has generated a YTD return of 17.3%. The CBOE Volatility Index (VIX), which measures investor expectations for near-term market volatility, has moved gradually lower after its late-December 2018 spike.
  • The strong start to the year is reminiscent of 2017, when the S&P 500 rose approximately 21% amid historically low levels of volatility.1
  • In fact, 2017 was the only year over the past 25 years in which the monthly returns of the S&P 500 were all positive.2 As the chart shows, equity markets have seen fewer monthly drawdowns on average in recent years than over the longer term.
  • Since 2016 the number of negative monthly returns per year has averaged 1.75 months compared to nearly 4.25 months for the period between 1995 and 2015.2
  • Periods of low volatility, as we are seeing in the markets today, are a good time for investors to begin preparing for more traditional levels of volatility before it emerges. As the U.S. economic expansion ages and policy uncertainty increases, there is no shortage of potential drivers of volatility through the remainder of this year.

1 Volatility as measured by CBOE VIX.
2 Bloomberg, as of May 2, 2019. Equity market performance based on S&P 500 Index.


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