PROTECT: Risk Assist

Volatility levels declined across all asset classes last week, even as the U.S. dollar appreciated and the Chinese yuan depreciated. Elections in the U.S. will come soon, and the Federal Reserve Board continues to signal that an interest rate hike in December is likely.

It’s important to note that during earnings season, volatility at the index level can be muted even as volatility among specific sectors and stocks can rise, sometimes sharply. This is a concept known as dispersion: The movement of individual stocks and sectors that follow earnings announcements often balance each other out, with some stocks and sectors rising and others falling. The ultimate effect can be that the movements experienced by a particular index remain relatively small.

SPEND: Real Spend

Real Spend holdings were somewhat choppy, but ended the week roughly where they started. Volatility remained suppressed, and all holdings have been significantly less risky recently than they historically have been over long periods.

Real Spend was designed to address the needs of retirement investors, including the need to make retirement assets last for what could be a long retirement. Real Spend remains positioned with an equity bias, with the goal of generating the long-term growth that long retirement (for example, a 30-year period) could require, while also funding current expenses. Stocks (as measured by the S&P 500) have never lost to intermediate-term government bonds over any rolling 30-year period going back to 1926. The best return for stocks over those 30-year periods was 4.9 times the best return for bonds.

This article was written by Horizon Investments, a participant in the ETF Strategist Channel.