Equity markets have experienced increased volatility since peaking in November 2021 but continue to trade significantly higher than their pandemic lows. From February 2020 to March 2020, during the pandemic selloff, the Vanguard Total World Stock Index ETF lost 34.4% of its value. From March 2020 to November 2021, the initial recovery, the Vanguard Total World Stock Index ETF recovered all its losses plus more, up 100.5%. From November 2021 to June 2022, during the current selloff, the Vanguard Total World Stock Index ETF lost 21.9% of its value but remains 56.6% higher than its pandemic low.
Technically, we’re in a bear market, which is defined by a decline of 20% or more. However, second-quarter gross domestic product (GDP) will determine if we enter a recession, which is defined as two consecutive quarters of negative GDP growth.
Again, we believe that central banks can navigate a soft landing and equity markets will continue their trajectory higher after the slower summer months. With that said, the Fund is positioned for growth. Although we expect equities to deliver positive returns over the remainder of the current economic cycle, there are several risks to monitor over the near term: higher inflation, rising interest rates, the Russia-Ukraine war, and the ongoing pandemic.