Where’s all this volatility investors keep talking about?
The Volatility Index (VIX) spiked to its highest level of the year, closing at 26.25 on October 15, 2014 (intraday it was as high as 31.06). And wouldn’t you know it - advisors said market volatility was the top topic of investor-initiated conversations in recent months (47%), followed by portfolio performance and concerns with government policy (tied at 29%) and global events (27%). It's worth noting that advisors have told us all year that market volatility has been the top investor concern, although it was a bit higher in the previous two quarters at 55% in April and 54% in July.
What advisors and investors are talking about
When thinking about conversations you've had with your clients over the past three months, which of the following have been the most common topics of conversations initiated by you? Initiated by your clients? (up to three responses)
For advisors, their top two conversations topics were pretty typical: portfolio rebalancing (43%) and portfolio performance (32%).What's different this time around is that market volatility was the third most popular advisor-initiated conversation at 27%.
This is a first. Market volatility has never made it to the top three conversations for advisors. Are advisors just trying to beat investors to the punch? Or could they be onto something? We’ll have to keep an eye on this to see if a broader trend develops. From our perspective, it is not surprising to see volatility pick up now that the markets are in the process of digesting the eventual – and likely gradual – increase in interest rates.
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