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Anxious Investors Try to Hedge Against a Big Selloff, Even as Good Times Roll

Stock volatility is near an all-time low and corporate profits have bounced back from a year ago, but investors are increasingly moving to protect themselves from big swings in financial markets. 

Long-term U.S. government bond yields, which move opposite to price, fell to fresh lows for this year on Monday, the latest sign of investors’ skepticism about economic growth. Meanwhile, utility stocks, often a refuge for nervous investors, have rallied this year, with another move up Monday helping to lift the broader market. 

Other signs of anxiety abound: A measure that shows investors expect big swings in the CBOE Volatility Index, or VIX, rose to an all-time high this month. The VIX, known as Wall Street’s fear gauge, has been stuck near an all-time low. The cost of insuring against a drop in the S&P 500 has climbed steadily since the beginning of the year. And currencies typically considered havens, such as the Swiss franc, have appreciated against the dollar since last month.

 

DYI