Citi Global Wealth PUTTiNG YoUr CASH To worK iN A HiGHer rATe eNviroNMeNT | | 43 Investments War in Eastern Europe, intensifying US-China FiGUre 1. THe New HiGHer voLATiLiTY reGiMe polarization, supply chain dislocation and pandemic aftershocks. Many of us sense that the VIX INDEX Volatility Average Average world is more uncertain today than it has been pre-COVID post-COVID for many years. And the truth is that financial markets reflect these concerns. 90 The volatility of the US stock market – as 80 measured by the VIX Index, the market’s estimate of expected volatility in the S&P 500 Index – averaged 15% between 2015 and 2020. 70 Since 2020, that number has risen to 24%, even after stripping out the extraordinary spikes in the early pandemic stages of March and June 60 2020 – FIGURE 1. y Such volatility extends beyond equity markets. ilit50 t As central banks have increased interest rates, la o fixed income markets and foreign exchange have V 40 reacted, with market volatility surging to levels not seen since before the global financial crisis in 2007-08. 30 The perception and reality of today’s volatility presents challenges for us as investors. When 20 is the right time to invest? What if I invest right before another move-down? Should I just stay in 10 cash for now? 0 2015 2016 2017 2018 2019 2020 2021 2022 Source: Bloomberg, as of 24 Nov 2022. Indices are unmanaged. An investor cannot invest directly in an index. They are shown for illustrative purposes only and do not represent the performance of any specific investment. Past performance is no guarantee of future results. Real results may vary. Chart shows the VIX Index between 2015 and 2022, with the average levels before and since COVID.