Marketing Volatility – Clarify What You Mean
A headline from the closing bell today brings out another tactical but important issue investment firms will face in talking about volatility.
The headline prominently cites the VIX (Volatility Index), which has gotten an increasing amount of mainstream attention over the last few years as the designated “fear gauge”. This makes incorporating volatility into marketing tricky, because in today’s environment volatility has multiple meanings.
There are traditional, backward-looking, vehicle-specific measures like standard/downside deviation. And there are forward-looking, blended measures like the VIX. Any investment manager wanting to incorporate volatility into its messaging may have to start by clarifying exactly what they’re talking about.