In the latest 'View from the Floor' podcast, Nick Samouilhan, Trevor Leydon, Ben Maynard and James McAlevey consider why volatility remains subdued and what might trigger its resurgence.
For much of the post financial crisis period, volatility in financial markets has been largely suppressed with any spikes short-lived; as evidenced by how quickly markets recovered from the UK’s ‘Brexit’ vote and more recently Donald Trump’s victory in the US presidential elections.
The world’s major central banks have undoubtedly helped engineer this unnatural calm through quantitative easing (QE) and a raft of other extraordinary measures. But as they start to step back from crisis mode, markets theoretically should return to a more normal – and potentially more volatile – state.
In this podcast, we look beneath the bonnet to consider:
- Why markets have been able to shrug off major political surprises and other shocks;
- Whether the broad theme of low volatility applies at a sector or individual security level or if pockets of volatility are building back up;
- Why new financial sector regulations are likely to result in higher volatility as QE programmes come to an end;
- Potential catalysts for major spikes of volatility in future and how investors should prepare for this.
Unless stated otherwise, any sources and opinions expressed are those of Aviva Investors Global Services Limited (Aviva Investors) as at 20 April 2017. This commentary is not an investment recommendation and should not be viewed as such. They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as advice of any nature. Past performance is not a guide to future returns. The value of an investment and any income from it may go down as well as up and the investor may not get back the original amount invested.