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, FTSE, J.P. Morgan Economic Research,MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Annualisedreturn and volatility covers the period from 2012 to 2021. Vol. is the standard deviation of annual returns. Govtbonds: Bloomberg Barclays Global Aggregate Government Treasuries; HY bonds: ICE BofAGlobal 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 and5%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 30 September 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 12.2%), annual returns are positive in 25 of 36 years
Source: Bloomberg Barclays, FTSE, J.P. Morgan Economic Research,MSCI, Refinitiv Datastream, J.P. Morgan Asset Management. Annualisedreturn and volatility covers the period from 2012 to 2021. Vol. is the standard deviation of annual returns. Govtbonds: Bloomberg Barclays Global Aggregate Government Treasuries; HY bonds: ICE BofAGlobal 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 and5%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 30 September 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. Annualisedreturn and volatility covers the period from 2012 to 2021. Vol. is the standard deviation of annual returns. Govtbonds: Bloomberg Barclays Global Aggregate Government Treasuries; HY bonds: ICE BofAGlobal 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 and5%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 30 September 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.
Is fixed income exciting again?
Watch Karen Ward and Iain Stealey’s discussion on whether we are past the worst of the bond market rout and why fixed income is now exciting for the first time in over a decade.
How can policymakers respond to volatility in sterling markets?
Join Karen Ward and Professor Jagjit S Chandha, Director for the National Institute of Economic and Social Research, as they discuss the implications of sterling volatility for global markets.
Q4 Guide to the
Markets
Join Chief Market Strategist for EMEA Karen Ward and Global Market Strategists Mike Bell and Hugh Gimber as they discuss what is driving current market volatility and the prospects for the coming months.
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.