Volatility Could Unravel Bets on Calm Markets

Discussion in 'Wall St. News' started by helpme_please, May 13, 2019.

  1. This is terrible. Utterly bad timing. Having highest level of equity exposure near market peaks.

    https://city.wsj.com/articles/6acdd08c-8f2a-4fdc-89fa-61a5719fa8ec

    Key Facts
    • Computer-driven volatility-targeting funds generally scoop up riskier assets like stocks during calmer periods.
    • When volatility hits, it sends them scrambling to sell their stocks.
    • At the same time they move into safer assets like Treasurys.
    • Asset managers like Vanguard Group and insurance companies run some of the bigger strategies of this type.
    • Volatility-targeting funds had an estimated 44% equity exposure last Tuesday.
    • That was their highest level of equity exposure since early October, said Wells Fargo Securities.