Posted: 4-8-25 | Innovia Wealth
Innovia Planning Insights: 3 Things to Do During Market Volatility
During volatile markets, most advice focuses on what not to do. Instead, here are three actionable steps you can take to set yourself up for long-term success:
- Review Your Goals-Based Investment Framework
Re-visit your goals and ask yourself, “Have my goals changed?” If the answer is no, then it is unlikely you should make significant changes to your investments. Using a goals-based investment framework is valuable during volatile periods. This approach ensures your investment strategy aligns specifically with your individual objectives, timelines, and risk tolerance. By clearly identifying and prioritizing your financial goals, your strategy can withstand short-term market fluctuations, enabling you to remain focused on achieving long-term success rather than reacting impulsively to temporary market movements.
- Deploy a Disciplined Rebalancing Strategy
Rebalancing as a strategy can benefit investors during periods of volatility. Market fluctuations can shift your portfolio’s asset allocation away from your intended targets. Rebalancing your portfolio helps ensure that your investments remain aligned with your predetermined risk level and long-term objectives. This disciplined approach allows you to systematically sell assets that have become overweight and reinvest proceeds into assets that are underweight, effectively capitalizing on market opportunities created by volatility.
- Consider Accelerating Dollar Cost Averaging
Employing a Dollar Cost Averaging (DCA) strategy—consistently investing equal amounts at regular intervals, such as contributions to a 401(k) or systematic investment accounts—can provide significant advantages, particularly during volatile market conditions. Accelerating your DCA contributions during downturns allows you to capitalize on lower market prices by purchasing more shares for the same amount of money. Over time, this strategy can reduce your average investment cost, positioning your portfolio effectively for recovery and future growth.
Stay steady and feel free to reach out if you have any questions—we are here to guide and support you through these periods of uncertainty.
Market Dynamics
Please Note: Due to recent market volatility, the figures below reflect returns through April 7, 2025.
| Asset Class | 1 month returns | Year to date (chart below) | 3-year returns (annualized) | 5-year returns (annualized) |
| Large companies (S&P 500) | -14.9% | -13.6% | 5.4% | 16.2% |
| Big technology businesses (Nasdaq 100) | -16.5% | -16.9% | 6.4% | 18.4% |
| Small companies (Russell 2000) | -16.1% | -18.5% | -3.0% | 10.9% |
| Foreign stocks (ACWI ex US) | -10.0% | -5.1% | 1.4% | 9.2% |
| Bonds (Bloomberg US Aggregate) | -0.2% | 2.5% | 0.4% | -0.5% |
March Recap: Weak Stock Market, Flat Bonds
- March and early April were challenging for stocks. International markets performed best, supported by a weaker U.S. dollar (down 4.6%) and ongoing geopolitical tensions. In contrast, U.S. small-cap, large-cap, and technology stocks declined—primarily due to tariff-related concerns and rising recession risks.
- Bond markets were essentially flat, with long-term interest rates ending the period close to where they began.
- The Federal Reserve kept interest rates unchanged, emphasizing the importance of monitoring economic growth, inflation, and unemployment, while evaluating how tariffs might affect each.
- Despite the headwinds, corporate earnings for Q4 2024 remained strong, with an impressive 18% year-over-year increase.
- Businesses have accelerated imports in response to tariff concerns, a move that negatively affects GDP calculations. Still, strong consumer spending and low unemployment (see chart below) may help offset some of the downside, though how long these trends will hold remains uncertain.
Unemployment has edged up slightly, but consumer spending remains resilient.
Looking Ahead: Tariffs and Geopolitical Shifts in Focus
- Economic growth forecasts for 2025 have been revised downward as companies front-loaded imports ahead of new tariffs and policy details became clearer.
GDP growth is now expected to fall below 2% in Q1 2025.
- Markets remain on edge about how tariffs will affect revenue growth, profit margins, interest rates, commodity prices, and currency valuations. Compared to last month, the tone has shifted toward greater caution.
- Geopolitical developments have also shifted investor focus away from U.S. strength toward a potential recovery in foreign markets—perhaps signaling a long-awaited rotation of capital into international equities.
Investment Strategy & Outlook
- The recent double-digit market drop, while unsettling, is not unusual—it tends to happen about every five years. While we still anticipate positive returns this year, gains are likely to be more modest than initially projected.
Historically, market corrections are often followed by gains over the next 6–12
- In the near term, markets will remain sensitive to tariff developments. Strategic portfolio rebalancing and maintaining diversification are more important than ever—especially if allocations have drifted significantly from long-term targets. We see international, value-oriented, and small-cap stocks as well-positioned for potential outperformance.
- In fixed income, we’re maintaining our current stance as long-term bond rates have moderated. Should rates continue to decline, we may look to shorten bond durations. Mortgage-backed securities and mid-quality corporate bonds remain attractive for their strong yields and low default risk.
- We’re also actively deploying assets in our Vintage and Opportunity Funds as new private investment opportunities arise. In semi-liquid private credit, real estate, infrastructure, and equity markets, we’re identifying early-stage deals with meaningful upside potential.
- We understand that market volatility can be quite jarring. But staying disciplined and focused on long-term goals is essential. Our approach continues to prioritize portfolio goal-achievement over short-term reactions.
If you’d like to talk more about our strategy or market views, we’re here to help.
Private Market Pulse: Secondary Funds
Secondary private funds have been increasingly common over the last 10-15 years, and you may have heard about them. Here is a little more information about secondary funds and why they can be a good part of a private portfolio. Secondary funds are dedicated funds that are raised to provide liquidity to investors in private investments. If you make a private investment, you commit to staying in that investment until it is sold and that could be 5-10 years or longer depending on how things work out. That can be troublesome if your circumstances change. One of the solutions to that problem that has been developed is secondary funds. Secondary funds evaluate and purchase the private equity positions of other investors. Because of the illiquidity that a secondary fund assumes, these purchases are usually made at a discount to the current value. This discount varies based on the assets being purchased and the current investment environment. Several of the semi-liquid funds that we recommend for our clients use secondary investments as one of the main components of their strategy and we have clients investing in secondary funds directly. The benefits often include: an instant portfolio of assets that the manager was able to completely due diligence, a discounted purchase price, increased liquidity, and steadier returns that are often more predictable. Given these advantages, we expect we will usually have a variety of secondary exposure in our client portfolios, and we continue to build relationships with managers that have expertise in this area.