Keeping Volatility in Perspective

Should I make any changes in my investment portfolio?

Clients should consult with their financial advisor if their investment plan has changed, however we typically do not recommend making any changes unless your financial objectives have materially changed. Corrections are a natural part of the investment cycle and over the long term, investors who stay invested and use volatility as an opportunity to buy are rewarded. The chart below highlights the risk of missing out on the best equity market days, which often come after large declines.

Don't miss the best equity market days

Source: Morningstar, CI Global Asset Management. S&P 500 TR in USD from January 1, 1990 – December 31, 2019 using daily returns.

How have markets reacted to virus outbreaks in the past?

The chart and table below highlight how the S&P 500 has performed during similar virus outbreaks in the past. While the market impact can be negative, the duration of the drawdown has been inconsistent, and the long-term impact has been limited. In all past scenarios, markets were higher 12 months after the virus was identified.

S&P 500 Index and Virus Outbreaks

Virus Start Date End Date Trading Days S&P 500 Return 12-month Return
SARS Jan-03 Mar-03 38 -12.8% 32.2%
Avian Flu Jan-04 Aug-04 141 -6.9% 4.4%
MERS Sep-12 Nov-12 43 -1.3% 16.7%
Ebola Dec-13 Feb-14 23 -5.8% 16.7%
Zika Nov-15 Feb-16 66 -12.9% 5.7%
Coronavirus Jan-20 Present 28 -10.3% N/A

Source: Bloomberg Finance L.P., CitiResearch, FactSet. As at February 27, 2020. The starting date for the 12-month return is the month each virus was identified.


This document is provided as a general source of information and should not be considered personal, legal, accounting, tax or investment advice, or an offer or a solicitation to buy or sell securities. Every effort has been made to ensure that the material contained in this document is accurate at the time of publication. Market conditions may change which may impact the information contained in this document. All charts and illustrations in this document are for illustrative purposes only. They are not intended to predict or project investment results. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment. Investors should consult their professional advisors prior to implementing any changes to their investment strategies.

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Published February 28, 2020