CAROLYN
I'm Carolyn Barnette, and I'm here with Mike Gates to talk about how we are thinking about investing through periods of market volatility. Mike, give us some of your best practices.
MIKE
You have to have a good starting point. So, you know, starting off with a diversified portfolio really matters. There was a period this year of 2025, from the start of the year through April, when the S&P 500 was down 18% from peak. If you looked at a diversified multi-asset portfolio like the benchmark of the target allocation mutual fund, 60/40 mutual fund, that portfolio, that index was down only 7% over the same period. And that speaks to the power of diversification. This is during a period when ten year yields on the U.S. Treasury bond actually didn't go down a lot. And yet you still see a much more kind of balanced return. When you got that stock bond-- those stock bond ingredients in your portfolio
MIKE
In the Target Allocation models, we have additional drivers that go even beyond what are in those traditional benchmarks. And so you see that shock absorption as a result.
CAROLYN
Absolutely. That is really important. And we certainly have seen the value of that because sometimes some of the best days in markets, follow some of the worst days in markets, which we have certainly experienced so far year to date. So, you know, anything else you want to add?
MIKE
Well, okay. So on this point about what happens in volatile markets, we've run some numbers. So if you look at data since 1950 for the US market. The US stock market and you look at periods of time two month periods of time where the market was down 15% or more and take all of those episodes and average up what happens afterwards on average. Here are the facts. Number one, three months later, 90% of the time stock market is higher than point when you look at it, it's down 15% or more or less than two months. Number two, the average return over the next three months is 10%. And number three, over the following 12 months, on average, the market is up 88% of the time. And the average return is 26%. So these moments when the market is down heavily 88% of the time, two months later, you're better off for having invested from a total return perspective. And I think that's really powerful.
CAROLYN
Absolutely. So certainly for longer term investors, always important to stay invested. Always important to stay invested through a diversified portfolio, diversified across and within stocks and bonds and perhaps even alternative strategies. And we also, of course, at BlackRock have a whole suite of tools available for anybody who's trying to manage volatility in the short term, whether that's using minimum volatility strategies to lower risk within their equities or whether that's making an asset allocation shift, moving into bonds or alternative strategies.
The mutual fund benchmark mentioned at the 0.31 second mark returned roughly -7.0% from December 31, 2024 to April 8, 2025. Index constituents for the mutual fund benchmark are as follows: 42% MSCI ACWI Index, 18% MSCI US Index, and 40% US Universal Index. Index performance is for illustrative purposes only. Index performance does not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. Index performance does not represent actual Fund performance. For actual fund performance, please visit www.iShares.com or www.blackrock.com.
iCRMH0425U/S-4402417
