Low Volatility Returns To The Limelight

After all, it is the month that saw the arrival of the 1929 market crash and the “Black Monday” slide in 1987. October 2018 probably will not wind up going down in ominous lore on par with 1929 and 1987, but during the first two weeks of the month, investors endured a significant uptick in volatility. Last week, the S&P 500 lost nearly 4 percent while falling below its 200-day moving average for the first time in 577 trading days. As the chart below depicts, the S&P 500’s average intra-year drops can be large, but in the vast majority of years, the index is able to generate positive annual returns.


Significant equity market gyrations, particularly in short time frames, can draw attention to the low volatility factor, an investment factor accessible via numerous exchange traded funds including the JPMorgan U.S. Minimum Volatility ETF (JMIN).

The Right Time?

Timing individual investment factors, including low volatility, is not an easy task. For advisers and investors mulling low volatility strategies over the near-term, there are some important points to consider. First, low volatility stocks, historically, deliver better returns than more volatile counterparts over long holding periods.

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