September Jitters? Market Volatility Meets Methodology
Ask any seasoned advisor which month makes investors squirm—and most will say in unison: September. [1]
They’re not wrong. Historically, the S&P 500, the Dow Jones Industrial Average and the Russell 2000 have had a long-term negative average in the month of September. Over the past 20 years, the S&P 500 hasn’t fared much better, still holding the title of the market’s “worst month.” [2] And in case anyone forgot, September 2022 was a whopper: the S&P dropped -9.34% in a single month. [3]
Why does September feel like a market minefield? A few culprits:
Seasonal Trends: Lower summer trading volumes give way to renewed activity, rebalancing, and profit-taking, which can pressure stock prices
Tax-Loss Harvesting: September is also a time when investors, particularly institutions, typically start reviewing portfolios and adjusting for tax purposes as Q4 approaches. Investors may begin to sell off underperforming assets to realize tax losses, which may drag down stock prices. This may increase downward pressure on the markets.
Economic Data and Corporate Earnings: September marks the end of Q3, prompting investors to turn their attention to corporate earnings reports released in early October. Signs of weakness in these reports—combined with softening economic indicators—may heighten uncertainty and trigger selling pressure.
Markets may get volatile. Headlines get loud. Clients start calling.
Enter The Core16 Best of Breed Premier Index: A Signal-Driven Co-Pilot
The Core16 Best of Breed Premier Index ETF (BOBP) which aims to track the Core16 Best of Breed Premier Index, isn’t a fortune teller—but it seeks to be methodical. Built to track a multi-factor, rules-based index that selects 50 U.S. large-cap stocks based on a proprietary blend of:
- Fundamentals (quality and earnings strength)
- Momentum and volatility measures
- A proprietary Gainers-to-Losers Indicator that helps gauge the underlying “health” of price action across the stock universe
The goal? Aim to stay nimble. Stay systematic. And filter out the noise—especially when markets are the loudest.
BOBP’s index re-evaluates its portfolio bi-weekly, swapping out stocks that show signs of fading momentum or elevated risk. Instead of making emotional calls when the VIX* spikes or a headline breaks, the index leans on data. For advisors, that can translate into a large-cap core holding that strives to stay invested while letting the math, not emotions, drive the lineup.
Why It Matters in September
In volatile months like September, BOBP’s index process kicks into high gear:
- Breadth and momentum filters help it lean into potential relative strength
- Risk overlays aim to avoid names with increasing drawdown** potential
- Equal weighting reduces reliance on mega-caps (no more worrying if one sector can potentially drag down the whole portfolio)
- Bi-Weekly rebalancing ensures fresh data leads the decision-making
That means when your clients start asking, “Should we be doing something?”—you can point to a strategy that already is.
Final Thought
September may have earned its bad reputation, but volatility doesn’t have to equal vulnerability. With the Core16 Best of Breed Premier Index ETF, advisors get a rules-based index strategy that seeks to adapt—not react.
This year, when September rolls around and the headlines heat up, you can stay focused on what matters: helping your clients stick to a disciplined process—no crystal ball required.
Explore the strategy here.
* The CBOE Volatility Index (VIX) is a real-time market index extensively used by investors to evaluate market sentiment and perceived risk.
** A drawdown is a measure of decline in an investment or fund from its peak to its trough over a specific period. Typically expressed as a percentage, it quantifies the extent of a downturn before the investment recovers to its previous high.
[1] Wang, Isabel, September is Historically The Worst Month For US Stocks, What Investors Need To Know, Market Watch, 9/3/2024
[2] Buchbinder, Jeffery et al, September’s Calendar Cruelty For Stocks, Outcome Private Wealth, August 2022
[3] Silverblatt, Howard, US Equities Market Attributes September 2022, S&P Global, 10/4/2022
[4] Wang, Isabel, July is historically a great month for US stocks. Here’s why this year might be different, Market Watch, 6/27/24.
Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the Fund, please call 1-833-462-3466 or visit our website at www.core16etf.com. Read the prospectus or summary prospectus carefully before investing.
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.
Diversification does not ensure a profit and cannot protect against losses in a declining market.
Indexes are unmanaged, do not incur management fees, costs and expenses, and cannot be invested in directly.
Asset allocation strategies do not ensure a profit and do not protect against losses in declining markets.
Investment returns will fluctuate and are subject to market volatility, so that an investor’s shares, when redeemed or sold, may be worth more or less than their original cost. Shares of ETFs are bought and sold at market price (closing price) not net asset value (NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns.
Exchange Traded Concepts, LLC serves as the investment advisor of the fund. SEI Investments Distribution Co. (SIDCO, 1 Freedom Valley Drive, Oaks, PA 19456) serves as the distributor for the BOBP ETF, which is not affiliated with Exchange Traded Concepts, LLC, or any of its affiliates.
Risk Disclosures:
Investing involves risk, including possible loss of principal. The fund is subject to risks including, but not limited to, passive investment risk, index tracking risk, authorized participant concentration risk, cybersecurity risk, equity investing risk, and large-capitalization risk. The Fund will be concentrated in an industry or a group of industries. This may subject the Fund to greater market risk than a fund that is more broadly diversified. BOBP is non-diversified. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the FDIC or any government agency.
The Core16 Best of Breed Premier Index (the “Index”) is a systematically constructed, rules-based index designed to measure the performance of 50 securities selected from the U.S. large-cap universe using Core16’s proprietary algorithm. The Index dynamically adjusts its selection logic based on market signals, adapting the type of securities it includes according to prevailing market conditions. It also maintains a flexible allocation between selected securities and cash to enhance risk-adjusted returns. The Index serves as a benchmark for a passively managed Exchange-Traded Fund (ETF).
