During market drops, the Low Volatility factor has outperformed

In 2017, the S&P 500 Index did not experience any corrections greater than 5%. So far in 2018, there have been three such market drops. So which year represents the more typical investor experience? History shows us that the relative calm of 2017 was an outlier, and that losses and volatility are recurring events that investors should be prepared for.

It’s not uncommon for the S&P 500 Index to experience corrections greater than 5%. As the table below shows, there have been 15 such declines since April 2011, with each year — except last year — experiencing at least one. In all but one of these periods, the S&P 500 Low Volatility index outperformed the S&P 500.

The Low Volatility factor outperformed the broad market in 14 of 15 downturns

S&P Low Volatility Index vs. S&P 500 Index

Source: Bloomberg, L.P., as of Oct. 29, 2018.

* The most recent low in the S&P 500 occurred Oct. 29, 2018

Key takeaway