Market turbulence can arrive unexpectedly and while it can be a nerve-wracking experience, it's often short-lived and can be a great source of opportunity for investors. Go to Inside the Market to stay informed with market recaps and actionable insights.
INVESTING 101
Explore how staying invested over time can outshine market timing. See compelling graphs that demonstrate long-term growth potential despite downturns.
Understanding the source of turbulence can help you prepare for it, whether it is a world event that has taken markets by surprise or a broader economic downturn. Here, we lay it all out — from the risks you might want to look out for to which investment strategies to explore. Read on to better prepare for market turbulence and potentially benefit from it.
The fight or flight instinct has helped our ancestors survive, but when it comes to investing, it’s often a losing strategy. When volatility strikes, panicked selling to avoid further losses could result in selling investments for less than you purchased them for. What’s worse, you run the risk of missing out on a rebound that may be right around the corner.
Missing these rebounds, or top-performing days, could harm long-term performance. When you look at an investment of $100,000 in stocks over a 20-year period, an investor who stayed invested would have made substantially more than one who missed just five top-performing days.
Missing top-performing days can hurt your returns
Source: BlackRock, Bloomberg as of 12/31/2024. Stocks are represented by the S&P 500 Index, an unmanaged index that is generally considered representative of the U.S. stock market. Past performance does not guarantee future results. It is not possible to invest directly in an index.
Image description: Bar chart showing the potential decrease in investment returns (over a 25-day period) when top performing days are missed.
If the ups and downs of your investment returns are making you queasy, review the allocation between stocks and bonds. Bonds can help counter balance the peaks and troughs of stock prices. Learn more about portfolio construction with our portfolio builder.
If market volatility leaves you wanting to press the eject button, consider ETFs designed to protect on the downside so you can stay invested for the long run.
Recessions can trigger a significant decline in stocks and a barrage of negative news stories that make it easy to lose perspective. Thankfully, the average recession only lasts around a year and investors who wait it out may be handsomely rewarded for their patience.1 Since 1926, the average performance of U.S. stocks in the year following a recession was nearly 25%. Investors who cannot wait for a bounce back, could consider three strategies to help find resilience against economic headwinds.
Average performance before, during and after a recession since 1929
Source: Morningstar as of 12/31/2024. Stock market represented by the S&P 500 Index from 3/4/57 to 12/31/2024. Past performance does not guarantee future results.
Image description: Bar chart showing the average performance of U.S. stocks before, during and after a recession over a three-year period.
Stocks: Companies with stable earnings, relatively low debt, and strong cash flows are associated with a characteristic referred to as “quality” and can all act as a buffer against losses in shrinking economies. Gain access to a basket of companies with these characteristics with the iShares MSCI USA Quality Factor ETF (QUAL).
Bonds: Investment grade bonds are loans by high quality issuers which have been deemed by independent ratings agencies to be less likely to miss an interest payment or be unable to repay the initial loan. Seek to track the entire U.S. investment grade bond market with the iShares Core U.S. Aggregate Bond ETF (AGG).
If the recession risk is too high to handle, consider moving into lower risk securities like U.S. Treasuries, where interest payments and initial loan values are guaranteed by the United States government. The iShares 7-10 Year Treasury Bond ETF (IEF) provides exposure to a U.S. Treasury bonds with remaining maturities between 7-10 years.2
Inflation deteriorates purchasing power, increasing the likelihood of your investments falling short. While inflation may be outside of your control, there are investments that can help manage the impact of inflation and help keep you on track.
Treasury Inflation-Protected Securities (TIPS) are U.S. government bonds with a face value that rises and falls with inflation, protecting investors from the risk of higher-than-expected inflation. Access a whole basket of TIPS in just one trade with iShares 0-5 Year TIPS Bond ETF (STIP).
Physical assets like real estate and commodities can help protect investors from rising inflation and diversify portfolios. The costs for food, energy, and housing account for a large part of the Consumer Price Index (CPI).1 Investing in the assets driving inflation can help your returns keep pace with it.
When inflation is high, excess cash sitting in your bank account isn't doing you any favors. Short term bonds can help access growth while keeping without committing to a long-term investment.
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1 Bureau of Labor Statistics as of February 2023. Index weighting for food, energy, and shelter was 13.5%, 7.1%. and 34.4% respectively.
2 While the fund invests in U.S. Treasuries, an investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency and its return and yield will fluctuate with market conditions.
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 Fund and BlackRock Fund prospectus pages. Read the prospectus carefully before investing.
Investing involves risk, including possible loss of principal.
The iShares Trusts are not investment companies registered under the Investment Company Act of 1940, and therefore are not subject to the same regulatory requirements as mutual funds or ETFs registered under the Investment Company Act of 1940. Investments in these products are speculative and involve a high degree of risk.
Following an investment in shares of the Trust, several factors may have the effect of causing a decline in the prices of gold and a corresponding decline in the price of the shares. Among them: (i) Large sales by the official sector. A significant portion of the aggregate world gold holdings is owned by governments, central banks and related institutions. If one or more of these institutions decides to sell in amounts large enough to cause a decline in world gold prices, the price of the shares will be adversely affected. (ii) A significant increase in gold hedging activity by gold producers. Should there be an increase in the level of hedge activity of gold producing companies, it could cause a decline in world gold prices, adversely affecting the price of the shares. (iii) A significant change in the attitude of speculators and investors towards gold. Should the speculative community take a negative view towards gold, it could cause a decline in world gold prices, negatively impacting the price of the shares.
Fixed income risks include interest-rate and credit risk. Typically, when interest rates rise, there is a corresponding decline in the value of debt securities. Credit risk refers to the possibility that the debt issuer will not be able to make principal and interest payments.
An investment in fixed income funds is not equivalent to and involves risks not associated with an investment in cash.
Commodities' prices may be highly volatile. Prices may be affected by various economic, financial, social and political factors, which may be unpredictable and may have a significant impact on the prices of commodities.
TIPS can provide investors a hedge against inflation, as the inflation adjustment feature helps preserve the purchasing power of the investment. Because of this inflation adjustment feature, inflation protected bonds typically have lower yields than conventional fixed rate bonds and will likely decline in price during periods of deflation, which could result in losses. Government backing applies only to government issued securities, and does not apply to the funds.
Real estate investment trusts ("REITs") are subject to changes in economic conditions, credit risk and interest rate fluctuations.
There can be no assurance that performance will be enhanced or risk will be reduced for funds that seek to provide exposure to certain quantitative investment characteristics ("factors"). Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods. In such circumstances, a fund may seek to maintain exposure to the targeted investment factors and not adjust to target different factors, which could result in losses.
The iShares Minimum Volatility Funds may experience more than minimum volatility as there is no guarantee that the underlying index's strategy of seeking to lower volatility will be successful.
There can be no guarantee that the Buffered Funds will be successful in their strategy to provide downside protection against Underlying ETF losses. The Funds do not provide principal protection or non-principal protection, and, despite the Approximate Buffer (the “Buffer”), an investor may experience significant losses on their investment, including the loss of their entire investment. In the event an investor purchases Fund shares after a Hedge Period begins or sells Fund shares prior to the end of the Hedge Period, the returns realized by the investor will not match those that the Funds seeks to provide. In periods of extreme market volatility, the Funds' return may be subject to downside protection significantly lower than the Buffer and an upside limit significantly below the Approximate Cap (the "Cap"). A new Cap is established during each Rebalance Period and is dependent upon current market conditions. As such, the Cap is likely to change, sometimes significantly, from one Hedge Period to the next.
Buffer and Accelerated Outcome ETFs invest in FLEX Options that reference the Underlying ETF. FLEX Options are subject to counterparty risk, which is the risk that the other party in the transaction will not fulfill its contractual obligation, and they may be less liquid than other instruments. The value of FLEX Options may be affected by interest rate changes, dividends, actual and implied volatility levels of the Underlying ETF’s share price, and the remaining time until the FLEX Options expire. Because of these factors, the Funds' NAV may not increase or decrease at the same rate as the Underlying ETF’s share price.
This material represents an assessment of the market environment as of the date indicated; is subject to change; 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 issuer or security in particular.
The strategies discussed are strictly for illustrative and educational purposes and are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. There is no guarantee that any strategies discussed will be effective.
The information presented does not take into consideration commissions, tax implications, or other transactions costs, which may significantly affect the economic consequences of a given strategy or investment decision.
This material contains general information only and does not take into account an individual's financial circumstances. This information should not be relied upon as a primary basis for an investment decision. Rather, an assessment should be made as to whether the information is appropriate in individual circumstances and consideration should be given to talking to a financial professional before making an investment decision.
The information provided is not intended to be tax advice. Investors should be urged to consult their tax professionals or financial professionals for more information regarding their specific tax situations.
The Funds are distributed by BlackRock Investments, LLC (together with its affiliates, "BlackRock").
The iShares Funds are not sponsored, endorsed, issued, sold or promoted by Bloomberg, BlackRock Index Services, LLC, Cboe Global Indices, LLC, Cohen & Steers, European Public Real Estate Association (“EPRA® ”), FTSE International Limited (“FTSE”), ICE Data Indices, LLC, Nasdaq, Inc., NSE Indices Ltd, JPMorgan, JPX Group, London Stock Exchange Group (“LSEG”), MSCI Inc., Markit Indices Limited, Morningstar, Inc., Nasdaq, Inc., National Association of Real Estate Investment Trusts (“NAREIT”), Nikkei, Inc., Russell, S&P Dow Jones Indices LLC or STOXX Ltd. None of these companies make any representation regarding the advisability of investing in the Funds. With the exception of BlackRock Index Services, LLC, who is an affiliate, BlackRock Investments, LLC is not affiliated with the companies listed above.
Neither FTSE, LSEG, nor NAREIT makes any warranty regarding the FTSE Nareit Equity REITS Index, FTSE Nareit All Residential Capped Index or FTSE Nareit All Mortgage Capped Index. Neither FTSE, EPRA, LSEG, nor NAREIT makes any warranty regarding the FTSE EPRA Nareit Developed ex-U.S. Index, FTSE EPRA Nareit Developed Green Target Index or FTSE EPRA Nareit Global REITs Index. “FTSE®” is a trademark of London Stock Exchange Group companies and is used by FTSE under license.
© 2026 BlackRock, Inc or its affiliates. All Rights Reserved. BLACKROCK, iSHARES, iBONDS, LIFEPATH, ALADDIN, THE MARKET IS YOURS and the iShares Core Graphic are trademarks of BlackRock, Inc. or its affiliates. All other trademarks are those of their respective owners.
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