Managing Volatility

Identifying strategies to help tailor portfolios for volatile markets

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Key takeaways
A smoother ride
1

Consider low volatility stocks for a risk-aware approach to growth potential

Focus on diversification
2

Look to asset allocation solutions to help diversify your portfolio

Both the equity and fixed income markets can be incredibly volatile. Investors may at times wonder whether they should be invested at all. But staying invested, even through short-term market disruption, can be a key factor in building long-term wealth. These ideas can help investors tailor their portfolios for volatile markets.

The challenge

In an ideal world, fundamentals alone would drive the markets. But that’s not the world we’re living in – or investing in. Today, a tweet in the morning can drive a sell-off in the afternoon, only to be reversed by the next day’s headlines. But jumping in and out of the markets to avoid volatility can be even more damaging to a portfolio than simply riding it out.

Portfolio considerations amid heightened volatility

Equities: Consider low volatility stocks for a risk-aware approach to growth potential
“More risk equals more returns” is a common misconception among investors. Yet the returns of low-volatility equities have historically provided a layer of protection in declining markets by capturing a smaller portion of downside movement, relative to the broader equity markets. 

For investors concerned about volatility, but who are also seeking to maintain equity market exposure, low-volatility strategies may help to reduce downside risk. 

Bottom line: Low volatility stock portfolios are designed to help investors benefit from the market’s upside while managing the impact of its downside. 

Asset allocation: Look to asset allocation solution to help diversify 
Effective diversification has the potential to provide stable portfolio outcomes in the face of increasing market volatility. Invesco Portfolios are constructed using strategic long-term asset allocation, seeking diversification and higher risk-adjusted returns for each level of risk exposure. The portfolios invest in a mix of both actively managed mutual funds and passive, factor-based exchange-traded funds (ETFs) across varying asset classes. 

Bottom line: Invesco Portfolios are convenient, low-cost, multi-asset solutions, spanning five investor risk profiles – conservative, moderate, balanced, growth and high growth. 

Invesco solutions to help manage volatility

Invesco manages a full suite of investment solutions for investors. Consult an advisor to help you build a portfolio that is suitable to your personal goals. 

For those worried about today’s uncertain markets, we would highlight these options to help manage volatility in an investor’s portfolio: 

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