Chart of the month: How Nervous Are Investors?

  • 10 June 2020
  • 5 mins reading time

Nervousness has fallen from extreme highs but remains elevated

Data shown: Chicago Board Options Exchange Volatility Index or “VIX” Source: Schroders Personal Wealth/ Bloomberg, 4 June 2020

This chart provides an indication of how nervous investors are about the coming 30 days. It is a measure of the demand for a type of hedge or insurance against falling stock prices on the S&P 500, one of the world’s major stock market indices.

The higher the index, the higher the nervousness. As the chart shows, nervousness rocketed in March 2020, but has been on a downward trajectory since then as lockdown restrictions reduced Covid-19 contagion.

However, the VIX level remains around 25, firmly above the sub-20 levels that one would associate with a more normal environment. Given the background of geopolitical risks, likelihood of more negative economic data and the potential for further rebounds in contagion rates in different regions, we think that this moderately elevated VIX number is appropriate.

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Forecasts of future performance are not a reliable guide to actual results in the future; neither is past performance a reliable indicator of future results. The value of investments, and the income from them, may fall as well as rise and cannot be guaranteed and the investor might not get back their initial investment.

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