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2017 Q1 Vital Signs: Smooth Sailing, For Now

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Capital markets have responded with persistent calm to an especially noisy time in American politics. In terms of market volatility, we’ve barely seen a ripple on the water. The VIX, Wall Street’s most popular volatility index, has barely crossed 14—a very low number by historical standards—since the day following last year’s election. As shown below, in Q1 we experienced the longest streak of market days with less than a 1% move over the last three decades. The unanswerable question on everyone’s mind: When will volatility spike again? A more important and more answerable question is: What do we need to own in our portfolios now that can provide diversification when it does?

VitalSigns Q117_Smooth Sailing_w617x275

Source: Bloomberg. Period shown is 1/2/1987-3/31/2017.

Past performance is not a guarantee of future results.

Virtus Investment Partners provides this communication as a matter of general information. The opinions stated herein are those of the author and not necessarily the opinions of Virtus, its affiliates or its subadvisers. Portfolio managers at Virtus make investment decisions in accordance with specific client guidelines and restrictions. As a result, client accounts may differ in strategy and composition from the information presented herein. Any facts and statistics quoted are from sources believed to be reliable, but they may be incomplete or condensed and we do not guarantee their accuracy. This communication is not an offer or solicitation to purchase or sell any security, and it is not a research report. Individuals should consult with a qualified financial professional before making any investment decisions.