Markets have returned to inducing sea-sickness for investors again. The Dow Jones Industrial Average fell about 800 points during Monday’s trading session as the world remains fixated on the Russia-Ukraine conflict.
With the 24-7 news cycle in full bore since Russia’s invasion of Ukraine, markets have been reacting to every bit of news. This time, it’s centered on Russia’s apparent ceasefire agreements that were meant as a tactical ploy in order to advance their position.
“Russian aggression in Ukraine remains unchecked and is driving volatility in global markets,” Entrepreneur reported. “The latest news has Putin manipulating ceasefire agreements in his efforts to push deeper into the embattled territory. The latest targets include population centers and civic infrastructure and are intended to drive Ukrainians from their homes.”
That in turn sent markets in a daze as the sell-offs mounted throughout the trading day. With inflation already causing worries for investors, it only added to the market madness, which spiked volatility.
“The fear index spiked more than 5% in early trading and is now well above what we view as a key resistance point,” Entrepreneur added. “The 32.00 level has been the top for the VIX for almost a year and it looks like this test of resistance broke through and is now heading higher.”
Muting Volatility and Maintaining Upside Potential
While the de-facto move in heavy volatility might be to head towards the safe confines of large caps, it can prevent potential gains in small gaps when markets rebound and push higher. That said, investors may want a more dynamic option like the FlexShares Morningstar US Market Factors Tilt Index Fund (TILT).
TILT seeks investment results that correspond generally to the price and yield performance of the Morningstar® US Market Factor Tilt Index. The index is designed to reflect the performance of a selection of companies that, in aggregate, possess greater exposure to size and value factors relative to the Morningstar US Market Index, a float-adjusted market capitalization-weighted index of U.S.-incorporated large-, mid-, small-, and micro-capitalization companies.
“The resulting fund seeks to reflect the experience of investing in the broad equity market while reducing the risk of overconcentration in large-cap stocks and pursuing the excess return potential from the value and small size factors,” FlexShares said.
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