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Gene Walden
Senior Finance Editor

How to discuss market volatility and bounce back opportunities with your clients


Over the past several weeks, we’ve seen tremendous volatility in the stock market in the wake of the global COVID-19 pandemic. Volatility is nothing new to the stock market, but the current economic situation is unique from anything we’ve seen in decades – if ever. 

This may be an ideal time for you to discuss market volatility with your clients to give them an idea of what may lie ahead in the economy and the markets as the world recovers from the pandemic.

After dropping about 34% from late February to March 23, the S&P 500®made a remarkable 25% rebound off its low in a two-week period ending April 9 on hopes that the stimulus efforts by Congress and the Federal Reserve would keep the economy on track.

But that doesn’t mean the volatility is over. The current nationwide lockdown is expected to drag down earnings across many industries through at least the 1st and 2nd quarters of 2020. Depending on how soon businesses can return to normal, the lag in earnings could continue beyond that. With months of uncertainty ahead, many investors could use some advice on how to deal with the market and how to seek to make the most of the potential recovery. 

The recent market decline and volatility present a unique opportunity for you to help clients with their long-term investment strategy as part of a potential “bounce back.”

Bounce backs of the past

You may want to remind your clients that although watching their portfolio decline in a market sell-off can be disquieting, it may present compelling opportunities for long-term investors. In fact, this may be a good time to discuss the possibility of rebalancing their portfolios and moving some assets to areas that you believe may have more long-term potential. Rebalancing may also be important to help them realign their portfolios back to their target allocations.

The attached quilt chart shows the performance of different U.S. equities asset classes one year after the market trough of the last 11 bear or near-bear markets as represented by various Russell indexes. As you talk with clients about the possibility of rebalancing their portfolios, this chart may help identify investment areas that should be considered as part of a rebalancing:

View the Asset Class Bounce Chart

In examining the chart, note how different asset classes have responded during the “bounce back” period. Historically, there has been a distinct advantage to investing leading into this bounce back period.

As shown, the mid and small cap asset classes have provided some of the largest one-year returns. Do your clients have exposure in these asset classes?

Thrivent offers a wide variety of funds to help investors meet their financial objectives during this challenging market environment. Learn more about the Thrivent Mid Cap Stock Fund and Thrivent Small Cap Stock Fund to see if they align with your bounce-back strategy.

Other helpful charts to share with clients

In addition to showing clients how various asset classes have performed during bounce-back periods, there are some other important areas that you might also want to discuss with your clients. In the attached PDF, we’ve included four charts that may be helpful in educating clients on market performance of the past in order to help prepare them for a potential bounce back in the current bear market. View Resources to Facilitate Market Volatility Conversations.

The four charts include:

  • Performance following market lows
  • Bull and bear markets
  • Intra-year declines vs. calendar year returns
  • Dispersion of calendar year returns

Additional investment options

In addition to the two funds mentioned earlier, Thrivent also offers several funds to consider owning to help meet your client’s portfolio needs during a volatile market environment. Here are five funds that may be of interest to you and your clients:

Thrivent Limited Maturity Bond Fund | THLIX

  • Seeks a high level of current income consistent with stability of principal
  • Historically has offered lower volatility and low correlation to equities1

Thrivent Government Bond | TBFIX

  • Seeks total return, consistent with preservation of capital
  • Historically has offered lower volatility and inverse correlation to equities

Thrivent Municipal Bond Fund | TMBIX

  • Seeks a high level of current income exempt from federal income taxes, consistent with capital preservation
  • Historically has offered lower volatility and inverse correlation to equities1

Thrivent Opportunity Income Plus Fund | IIINX

  • Seeks a high level of current income, consistent with capital preservation
  • Historically has offered lower volatility and low correlation to equities1

Thrivent Low Volatility Equity Fund | TLVOX

  • Seeks long-term capital appreciation with lower volatility relative to the global equity markets

See more on the Thrivent Low Volatility Equity Fund

During challenging times, you should know that Thrivent Mutual Funds remains focused on investing and active management. We work to help our funds align to their stated objectives. Our portfolio managers leverage technology, research and analytics to guide decision-making through market volatility. We appreciate the work you do to guide clients through uncertainty to stick with their long-term investment objectives.

Past performance is not necessarily indicative of future results.

Indexes are unmanaged and do not reflect the fees and expenses associated with active management.

Investments cannot be made directly into an index.

1 Correlation based on 10-yr trailing period ending Feb. 29, 2020 relative to the S&P 500® Index, a widely-followed index composed of 500 widely-held U.S. stocks.