How to Manage Volatility - Context

Volatility can be an investor’s worst enemy. It often leads to bad decisions—even in good markets.

Global stocks rose most years since 1980 and delivered annual returns of 9.7% on average. Yet they often dropped sharply at some point during most of those years. And that makes investors nervous—leading to the classic mistake of selling in a falling market…and locking in losses.

So how can you combat volatility?

Look for portfolios with high conviction in stocks that have strong long-term potential—even when markets are bumpy. Our research shows active funds perform better in more challenged market environments. And don’t rely on passive portfolios for protection. Funds that track an index aren’t risk free. When markets fall, they fall.

Before volatility strikes again, build a strategy that can keep you calm, confident…and moving toward your long-term goals.