Invest with composure
Market volatility is a fact of life. While global markets offer access to attractive long-term capital growth and income opportunities, market pullbacks happen frequently. Fortunately, there are several strategies that investors can use to make sure they are best positioned to ride out the market’s ups and downs.
Aim long
Longer time horizons can dampen the impact of market volatility.
Stay calm
Selling when markets are volatile risks locking in losses.
Diversify
Diversification can stabilise portfolios in volatile markets.
Take a long view to manage volatility
History suggests investors are much less likely to suffer losses when investments are held over longer periods of time, particularly for balanced portfolios. It's therefore important to keep a long-term perspective.
Range of equity and bond total returns
%, annualised total returns, 1950-present
Source: Bloomberg Barclays, Refinitiv Datastream, S&P Global, Strategas/Ibbotson, J.P. Morgan Asset Management. Large cap equity represents the S&P 500 Composite and Bonds represents the Strategas/Ibbotson US Government Bond Index, the US Long-term Corporate Bond Index until 2000 and the Bloomberg Barclays US Agg. Corporate – Investment Grade Index from 2000 onwards. Returns shown are per annum and are calculated based on monthly returns from 1950 to latest available and include dividends. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 31 December 2022.
Don't panic sell when markets drop
Drawdowns are part and parcel of investing. Stock markets have mostly ended in positive territory, even in years marked by declines of more than 10%. Selling when markets are volatile therefore risks locking in losses when markets bounce back.
FTSE All-Share intra-year declines vs. calendar-year returns
%; despite average intra-year drops of 15,5% (median 12,1%), annual returns are positive in 32 of 43 years
Source: MSCI, Refinitiv Datastream, J.P Morgan Asset Management. Returns are local currency price returns. Intra-year decline refers to the largest market fall from peak to trough within the calendar year. Returns shown are calendar years from 1980 to 2022. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 31 December 2022.
Spread risk across regions, asset classes and strategies
In the last 10 calendar years, a portfolio investing in a combination of developed market and emerging market equities, investment grade and high yield bonds, property securities, commodities and hedge funds has delivered healthy returns with much less volatility than investing in equities alone.
Asset class returns (EUR)
Source: Bloomberg Barclays, FTSE, J.P. Morgan Economic Research, MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Annualised return and volatility covers the period from 2012 to 2021. Vol. is the standard deviation of annual returns. Govt bonds: Bloomberg Barclays Global Aggregate Government Treasuries; HY bonds: ICE BofA Global High Yield; EMD: J.P. Morgan EMBI Global Diversified; IG bonds: Bloomberg Barclays Global Aggregate – Corporates; Cmdty: Bloomberg Commodity; REITs: FTSE NAREIT All REITS; DM equities: MSCI World; EM equities: MSCI EM; Hedge funds: HFRI Global Hedge Fund Index; Cash: JP Morgan Cash Index EUR (3M). Hypothetical portfolio (for illustrative purposes only and should not be taken as a recommendation): 30% DM equities; 10% EM equities; 15% IG bonds; 12,5% government bonds; 7,5% HY bonds; 5% EMD; 5% commodities; 5% cash; 5% REITs and 5% hedge funds. All returns are total return, in EUR, and are unhedged. Past performance is not a reliable indicator of current and future results. Guide to the Markets - Europe. Data as of 31 December 2022.
Insights for challenging markets
Market Watch – economic and market updates
Listen to our market strategists and senior investors to find out more about the economic repercussions of the war in Ukraine and its impact on markets.
Unpicking current turmoil and implications for the economy and markets
Volatility following the collapse of SVB, and turmoil in the price of certain European bank shares, has prompted concerns that another crisis could be on the horizon. Join Karen Ward, Chief Market Strategist for EMEA, and Alexei Kapkin, Global Sector Specialist, as they unpick recent events, consider scenarios for the coming months and assess the potential market implications.
Gauging the resilience of the European economy
Rolf Strauch, Chief Economist and Managing Board Member of the European Stability Mechanism, joined Karen Ward for the latest Market Watch to discuss how Europe is poised to deal with higher interest rates following the demise of Silicon Valley Bank, changes to the region’s infrastructure since the sovereign debt crisis, and what to expect next for the European economy.
Negotiating rate uncertainty
Iain Stealey, International CIO of our Global Fixed Income, Currency & Commodities Group, discussed the key themes that emerged from our latest investment quarterly meeting, including the impact of tighter monetary policy on different parts of the economy, the conditions needed for a soft landing and what this backdrop means for fixed income.
Building resilient portfolios
In an unpredictable world, investment portfolios need the flexibility to adapt and thrive, whatever lies ahead. This means investing in funds that can provide exposure to the market’s upside when things are going well, but that can also help to provide stability when times are tough.