Alternatives Update 1st Quarter 2018
The 1st quarter of 2018 came in like a lion with the S&P 500 Index (SPX) up 5.73% in January and the MSCI Emerging Markets Index up 8.33%. It however, did not go out like a lamb. The SPX fell 6.13% and MSCI Emerging Markets Index fell 6.39% over the subsequent two months. There was a distinct reversal in themes from 4th quarter of 2017, namely cryptoasset mania and the absence of volatility. Bitcoin lost over 52% of its value during the quarter (see Figure 1). Equity volatility, as measured by the closing value of the CBOE VIX Index (VIX), spiked to a high of 37.32 during the quarter. This level was over 4 times the record low reading in November 2017 (9.14) and almost 4 times the average of the first week of the first quarter. Lost in the closing values was that the VIX went on to hit 50.30 in overnight trading after the equity markets had closed on February 5th. The portmanteau "Volmagedon" is being used by some to describe the breathtaking movement of the VIX from February 2 to February 6 and its impact on various corners of the capital markets.

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Posted on Thursday, April 26, 2018 @ 3:52 PM

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.