The stock market has had an up and down year, driven largely by volatility in tech and artificial intelligence (AI) stocks. The CBOE Volatility Index (VIX) reached 35 in March, levels only surpassed in the last five years by 2025's tariff turmoil and the outbreak of the war in Ukraine.
The S&P 500 has ranged from 6,317 to 7,794 so far this year, with year-to-date returns as low as -7.7% and as high as 13.9%. These swings are largely correlated with the performance of big tech stocks, such as Nvidia, whose share price has ranged from $164.27 to $236.54 this year.
According to the latest fund flow data from the Investment Association, retail investors put more money into funds during June than any month since August 2021, but this was largely directed towards defensive strategies such as bonds or cash-like assets.
Simon Skinner, head of investments at Orbis Investments, said: "Exciting investments have an unfortunate habit of becoming expensive precisely because everyone finds them exciting." He added that "boring" investments can have the opposite problem, with lower expectations and valuations.
Experts point to consumer staples, utilities, healthcare and financials as less volatile sectors. Marcel Stötzel, portfolio manager of Fidelity European Trust PLC, said: "Some of the best long-term investments can be businesses that do relatively mundane things exceptionally well, generate cash consistently and compound that cash for shareholders over many years."