Seek growth and stability in volatile markets

A new era of higher volatility

Markets are grappling with heightened global volatility after years of relative calm. However, we view this as a normalization of volatility, as recent levels are more in line with the long run average.

Volatility is measured by the CBOE Volatility Index (VIX), which is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices.

As the bull market enters its seventh year and fears of slowing global growth loom large, we expect that higher volatility may be with us for some time. Investors may want to consider the following actions to position their portfolios for this new paradigm.

Aim to manage risk over the long term

Investors can seek to reduce volatility over the long term by adjusting their core holdings. iShares Edge Minimum Volatility ETFs offer broad market exposure and have a track record of delivering market-like returns with less risk. These funds have historically lost less during market declines while still capturing meaningful gains during upswings.

iShares Edge MSCI Min Vol USA ETF (USMV) iShares Edge MSCI Min Vol USA ETF
iShares Edge MSCI Min Vol EAFE ETF (EFAV) iShares Edge MSCI Min Vol EAFE ETF
iShares Edge MSCI Min Vol Emerging Markets ETF (EEMV) iShares Edge MSCI Min Vol Emerging Markets ETF

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Take action to seek growth and stability

In a world where current opportunities are scarce, iShares offers solutions for investors seeking growth and stability in the near term. Learn more in the tabbed sections below.

Focus on Quality U.S. Stocks

“Quality” companies, which are characterized by high profitability, steady earnings, and low leverage, have typically outperformed momentum stocks (those that have been on an upswing) when market volatility rises. Another way to target steady growth is through exposure to companies that have the potential to sustainably increase dividends over time.

Funds such as the following may offer an attractive balance between stability and growth:

iShares Edge MSCI USA Quality Factor ETF (QUAL) iShares Edge MSCI USA Quality Factor ETF
iShares Core Dividend Growth ETF (DGRO) iShares Core Dividend Growth ETF

Look for Growth Abroad

Bonds have historically had low correlation to stocks, thereby serving as a ballast to a portfolio during market downturns. A short duration bond strategy can potentially offer low volatility, regular income, and capital protection if rates rise.

Funds such as the following provide diversified exposure to short-term bonds:

iShares Short Maturity Bond ETF (NEAR) iShares Short Maturity Bond ETF

Seek growth and stability in volatile markets

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Carefully consider the Funds' investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds' prospectuses or, if available, the summary prospectuses, which may be obtained by visiting the iShares ETF and BlackRock Fund prospectus pages. Read the prospectus carefully before investing.

Investing involves risk, including possible loss of principal.

Information on Apple, Microsoft, Google, Intel, IBM, Cisco and Oracle is provided purely for illustrative purposes and should not be deemed an offer to sell or a solicitation of an offer to buy shares of any security other than the iShares Funds, that are described in this material. Fund holdings are subject to change.

Funds that concentrate investments in a single sector will be more susceptible to factors affecting that sector and more volatile than funds that invest in many different sectors. Technology companies may be subject to severe competition and product obsolescence.

This material represents an assessment of the market environment as of January 2015 and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the funds or any security in particular.

The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective. The information presented does not take into consideration commissions, tax implications, or other transaction costs, which may significantly affect the economic consequences of a given strategy or investment decision.

The Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).

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