Vanguard's View on Volatility

Research magazine has asked Vanguard and other major mutual-fund groups to explain how investors are responding to the current market climate. “Vanguard shareholders have been showing remarkable resilience in the face of this period of market volatility,” a company spokesperson says.

“While call volume and web activity is well above average, most investors are sticking to their long-term plans. We’ve seen a very small minority of investors move out of stock and bond funds and into safer havens like money market funds,” Vanguard explains. “In fact, some are viewing the stock market decline as a buying opportunity.

“A look at Vanguard defined contribution participant account behavior through September 30 illustrates this point: In the first nine months of 2008, nearly 90 percent of participants executed no exchanges within their retirement plans. In September itself, only 3 percent of participants made an exchange,” says the firm.

“It would be difficult to speculate about what investors might do in 2009. That said, we anticipate that most will continue to stay the course, sticking to their long-term plans.”

As of September 30, Vanguard had some $1.2 trillion in assets under management.