What EPFR data tells us about the likelihood of greater volatility

The VIX is in…

Funds offering exposure to the most widely followed measure of US equity market volatility, the Chicago Board Options Exchange’s CBOE Volatility Index (VIX), are seeing a surge in flows as investors pencil in a much bumpier ride in 2021 than they’ve experienced since the 2008-12 post-financial crisis period.

Graph depicting the 'Cumulative volatility fund flows, in US million dollars, from 2013 to 2021'.


Fears that global reflation will trigger higher-than-expected inflation, growing appetite for emerging markets exposure and the surge in retail involvement are among the factors fuelling this reassessment of likely volatility.

On the surface, fear of volatility is running ahead of market – or realized – volatility. But analysis by EPFR, which will be discussed in future segments, suggests that by other measures underlying volatility is indeed picking up at a time when receptiveness to central bank guidance and actions is diminishing.

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The final week of May ended with US lawmakers voting to lift the country’s debt ceiling, markets assigning a one-in-three chance that the Federal Reserve will raise interest rates in mid-June and the price of oil testing 18-month lows. Against this backdrop, flows into all EPFR-tracked Equity Funds hit a 17-week high on the back of record-setting inflows to Technology Sector Funds and China Equity Funds absorbed nearly $5 billion.

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