The past 10 months have given investors some pretty rocky moments, with multiple headwinds including geopolitics and slowing growth prompting market sell-offs. 
However, it’s not all bad news. Despite these worries, the MSCI AC World index made a total return of 17.50 per cent between the start of 2019 and the end of October.
With this in mind, we look across different geographies, industries and fund sectors to see which have presented investors with the highest and lowest levels of volatility.
We start with a snapshot of the different stock markets around the globe, with their performance worked out in sterling to reflect what a UK-based investor would have experienced.
Source: FE Analytics
The least rocky market over 2019 so far has been Japan, as the Topix index posted annualised volatility of just 6.67 per cent over the 10 months in question. Japan’s stock market has rallied in recent months despite issues such as the US-China trade as investors favoured its low valuations and ultra-loose monetary policy.
Not all investors are convinced by the rally, however, with BlackRock among those sounding a warning that more challenging times could be ahead, which could see a return of volatility.
Ben Powell, chief investment strategist for Asia-Pacific at the BlackRock Investment Institute, said: “Japan has been the best performer in major equity markets since mid-year. The main driver? A perceived easing in US-China trade tensions that led to a shift by investors into unloved assets such as value equities, including beaten-down Japanese stocks.
“We do not see this rotation having staying power though. In the near term we see potential for further bouts of market volatility, as fallout from the trade war is reflected in weak economic data.”
In contrast, the most volatile country has been Brazil. FE Analytics shows the MSCI Brazil index’s annualised volatility standing at 22.52 per cent over 2019 to date.
The index made a 15.75 per cent total return between the start of the year and the end of October. While global trade tensions have hit the Brazilian real more than almost any other emerging market currency and added to volatility, investors have been attracted to Brazilian stocks by factors such as interest rate cuts, tax reform and progress on the pension reform bill.
Source: FE Analytics
Turning to the various industries in the MSCI AC World index, we see that more defensives areas of the market have lived to their name and given investors lower volatility.
The telecommunications services sub-index recorded annualised volatility of just 7.37 per cent, while healthcare, utilities and consumer staples stocks weren’t far behind.
At the bottom of the table is energy, with its annualised volatility of 15.80 per cent thanks to the see-sawing oil price. Higher volatility has also been witnessed in the information technology, consumer discretionary and materials industries.
When it comes to fund sectors, IA UK Direct Property has given investors the smoothest ride this year with annualised volatility of just 0.64 per cent (we left out some peer groups such as the two money market sectors and IA Unclassified).
That said, it has been the lowest returning sector over the same period, making a total return of only 0.49 per cent. Meanwhile, some investors are cautious on this part of the market given the headwinds that Brexit might create.
Source: FE Analytics
IA Targeted Absolute Return is another where low volatility has come with low returns (making 3.33 per cent) although the average strategic bond fund is up 8.45 per cent while posting the third lowest volatility of the Investment Association universe.
Investors willing to stomach higher volatility will have been rewarded, conversely.
The IA Technology & Telecommunications sector’s volatility for 2019 to date has been 15.67 per cent but its average member is up 23.15 per cent.
IA North American Smaller Companies (the most volatile sector), IA China/Greater China, IA North America, IA European Smaller Companies and IA Global have annualised volatility of more than 10 per cent but have made decent returns for investors.
The trend doesn’t hold true everywhere, however. The average IA UK Index Linked Gilts fund’s volatility for this year comes in a 15.85 per cent but the total return is just 8.80 per cent.