Learning Center

Back

Low-Volatility Strategies for a Less-Stressful Ride

After an unusually steady 2017, the U.S. stock market took a more volatile turn in the first half of 2018.1 A number of factors contributed to this year’s volatility, but trade tensions between the United States and its largest trading partners were a frequent trigger. A series of announced tariffs raised the possibility of a broader trade war and repeatedly spurred market jitters.2

Volatility refers to stock market ups and downs, but few investors worry about the ups. It’s the downs that may cause investors to lose sleep at night.

If you don’t need the money in your portfolio for a long time, you may be better off tuning out day-to-day movements in the market and sticking with your investment approach. However, if you are nearing retirement or just have a more conservative risk tolerance, holding stocks and stock funds that tend to be less volatile may help you manage risk while maintaining a robust equity portfolio.

IMAGE

Stocks and Funds

All stocks are volatile to some degree, but investors who are pursuing higher returns have to accept higher risk and price swings. Even so, some stocks have historically been less volatile than others.

For example, stocks of larger, well-established companies tend to be less volatile than the stocks of smaller companies, and certain market sectors tend to fluctuate more than others. A portfolio invested too heavily in a particular company, industry, or market sector could also carry higher risk and volatility.

Some mutual funds and exchange-traded funds (ETFs) — typically labeled “minimum volatility” or “low volatility” — focus on managing volatility and may help stabilize the equity portion of your portfolio. These funds vary widely in their objectives and strategies, and there is no guarantee that they will maintain a more conservative level of risk, especially during extreme market conditions.

Keep an Eye on Beta

One commonly used measure of a stock or stock fund’s volatility is its beta, which is typically published with other information about an investment. The stock market as a whole (represented by the S&P 500 index) is generally considered to have a beta of 1.0. A beta higher than 1.0 means the investment has been more volatile than the broader market, whereas a beta below 1.0 indicates it has been less volatile.

For example, a beta of 0.8 means that the investment has been about 80% as volatile as the market. In theory, such an investment might experience only 80% of market gains during an upswing and only 80% of losses during a downswing — and thus would have less ground to regain when the market turns upward again.

Asset allocation is a method used to help manage investment risk; it does not guarantee a profit or protect against investment loss. The principal value of all stocks, mutual funds, and ETFs will fluctuate with changes in market conditions. Shares, when sold, may be worth more or less than their original cost.

Mutual funds and ETFs are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.

 

Information provided has been prepared from Broadridge Advisor Solutions sources and data we believe to be accurate, but we make no representation as to its accuracy or completeness. Data and information is provided for informational purposes only, and is not intended for solicitation or trading purposes. Broadridge Advisor Solutions is not an affiliate of AXA Advisors, LLC. Please consult your tax and legal advisors regarding your individual situation. Neither AXA Advisors nor any of the data provided by AXA Advisors or its content providers, such as Broadridge Advisor Solutions, shall be liable for any errors or delays in the content, or for the actions taken in reliance therein. By accessing the AXA Advisors website, a user agrees to abide by the terms and conditions of the site including not redistributing the information found therein.

Securities offered through AXA Advisors, LLC (NY, NY 212-314-4600), member FINRA, SIPC. Annuity and insurance products offered through AXA Network, LLC and its subsidiaries.

California Insurance License #: 0E64585 (Powell), 0L27625 (McKenna)

Chares Altizer, James Blassingham, James Denny, Matthew McKenna, & Stephen Powell has earned the Retirement Planning Specialist (RPS) title. The Retirement Planning Specialist title is awarded by AXA Advisors, based upon the Financial Professional's (FP) receipt of a Certificate in Retirement Planning from the Wharton School, University of Pennsylvania. In a collaboration between the Wharton School and AXA Advisors' affiliate, AXA Equitable Life Insurance Company (NY, NY), coursework for the certificate was developed exclusively for AXA Advisors FPs, and the title may be used only by FPs who have completed the required coursework and maintain the title through ongoing continuing education requirements. To verify that an FP has earned and holds the title in good standing, contact AXA Equitable atretirement@axa-equitable.com. Complaints about an AXA Advisors FP should be directed to customer.relations@axa-equitable.com.

Securities offered through AXA Advisors, LLC (212-314-4600), member FINRA/SIPC. Investment advisory products and services offered through AXA Advisors, LLC, an investment advisor registered with the SEC. Annuity and insurance products offered through AXA Network, LLC and its insurance agency subsidiaries. AXA Network, LLC does business in California as AXA Network Insurance Agency of California, LLC and, in Utah, AXA Network Insurance Agency of Utah, LLC. AXA Advisors and its affiliates do not provide tax or legal advice. Individuals may transact business and/or respond to inquiries only in state(s) in which they are properly registered and/or licensed. The information in this web site is not investment or securities advice and does not constitute an offer.

Capital Financial Group is not owned or operated by AXA Advisors or AXA Network.

AXA Equitable Holdings, Inc. is a publicly traded corporation, and it and its subsidiaries are currently using trademarks including the "AXA" name, AXA logo and associated trademarks of AXA SA under license.

Link to axa.com

Privacy Policy

Check the background of this financial professional on FINRA's BrokerCheck
Check the background of this financial professional on FINRA's BrokerCheck