Now, the Federal Reserve is looking to break from the pack, ending its bond purchasing program and move toward rate hikes. In contrast, the European Central Bank is expected to add quantitative easing.
Kotok points out that the result includes violent currency adjustments, greater swings in stocks, and widening spreads in Treasuries and high-yield bonds, among others.
Furthermore, as more managers start stepping back into the markets, swings may be magnified. Only 24% of active managers were outperforming their benchmarks coming into the fourth quarter, the lowest level for a bull market, and Kotok argues that large cash holdings have been a contributing factor to the underperformance in many portfolios.
For more information on the CBOE Volatility Index, visit our VIX category.
Max Chen contributed to this article.