Why is Stock Market Volatility So Low?

While investors continue to enjoy strong returns from global equities, one nagging source of discomfort is the remarkably low level of volatility displayed by markets

T. Rowe Price 11 April, 2017 | 10:31AM
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Morningstar's "Perspectives" series features investment insights from third-party contributors. Here, Scott Berg, portfolio manager of the T. Rowe Price Global Growth Equity Fund, asks why it is too quiet in global equity markets.

While investors continue to enjoy strong returns from global equities, one nagging source of discomfort is the remarkably low level of volatility displayed by markets, especially given continued uncertainties on the macroeconomic, political and corporate earnings front.

This perspective is demonstrated by the MSCI AC World Index returning 7% year-to-date and more than 10% since the US election, to March 31, with resolute and largely uninterrupted upward momentum. The calm nature of markets can be evidenced by realised equity market volatility falling to levels rarely seen in recent history.

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T. Rowe Price  T. Rowe Price is a global investment management firm dedicated to helping clients achieve long term success.

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