Coronavirus Volatility Equities Chart

When Markets Are Recovering, Don't Ignore Volatility

18 1月 2021
2 Minute Read
Volatility Persists in Equity Rebound
MSCI ACWI Index line chart from 2018, with red segments indicating periods of major declines. Market returns and volatility levels are shown for each year.

Past performance is not necessarily indicative of future results. There is no guarantee that any estimates or forecasts will be realized.
Through December 31, 2020
Volatility is the annualized standard deviation of daily returns.
Source: Morningstar, MSCI and AllianceBernstein (AB)

Global stocks rebounded sharply from the coronavirus market crash in 2020, but the ride was rocky. Even in a rising market, volatility is a clear and present danger. With so many risks clouding the outlook, we believe that investors should focus on generating a smoother pattern of returns through the recovery from COVID-19.

When equity markets tumbled in early 2020, controlling volatility was a high priority for many investors. But as markets recovered through the last nine months of the year, volatility might have seemed less pressing.

In fact, volatility persisted through 2020, even as stocks recovered. The daily volatility of the MSCI ACWI Index was 28%—nearly three times higher than in 2019. The index rose or fell by at least 1% in 90 days during 2020—more than three times as frequently as in 2019. 

Stay Invested Through Volatile Episodes

Big drawdowns can be unsettling for investors. But selling out of equities when the market corrects is often a mistake. Indeed, investors who exited stocks during the COVID-19 crash during February and March of 2020 would have locked in losses and missed the rebound through the rest of the year. Since it’s almost impossible to time inflection points in the market, we believe staying invested through bouts of volatility is essential for success.

Even after recovering most of the losses from the first quarter 2020 sell-off, news of vaccine breakthroughs has pushed equity markets higher since November. Yet the world’s exit path from the pandemic is still highly uncertain. Restoring global economic growth will be an uneven process that will depend on fiscal policies, public health concerns and consumer confidence. These are just some of the risks that may continue to fuel volatility this year. In this environment, we think it’s important to consider investment strategies that can help investors capture good sources of long-term return potential but that are also designed to help reduce risk in falling markets and deliver a more comfortable investment journey.

The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams and are subject to revision over time. AllianceBernstein Limited is authorised and regulated by the Financial Conduct Authority in the United Kingdom.

MSCI makes no express or implied warranties or representations, and shall have no liability whatsoever with respect to any MSCI data contained herein.

Investment involves risk. The information contained here reflects the views of AllianceBernstein L.P. or its affiliates and sources it believes are reliable as of the date of this publication. AllianceBernstein L.P. makes no representations or warranties concerning the accuracy of any data. There is no guarantee that any projection, forecast or opinion in this material will be realized. Past performance does not guarantee future results. The views expressed here may change at any time after the date of this publication. This article is for informational purposes only and does not constitute investment advice. AllianceBernstein L.P. does not provide tax, legal or accounting advice. It does not take an investor's personal investment objectives or financial situation into account; investors should discuss their individual circumstances with appropriate professionals before making any decisions. This information should not be construed as sales or marketing material or an offer of solicitation for the purchase or sale of, any financial instrument, product or service sponsored by AllianceBernstein or its affiliates. This presentation is issued by AllianceBernstein Hong Kong Limited (聯博香港有限公司) and has not been reviewed by the Securities and Futures Commission


About the Authors