Volatility
An ETF's volatility measures the amplitude of its price fluctuations, expressed as the annualised standard deviation of returns. Higher volatility means more risk, but also more potential.
An ETF's volatility is the statistical measure of its NAV fluctuation amplitude over time. It is calculated as the annualised standard deviation of daily or monthly returns. A volatility of 15% means the ETF's value fluctuates by roughly ±15% per year around its central trend, with 68% probability (one standard deviation).
Volatility levels by asset class
- Short-term government bonds: 1-3% per year
- Long-term government bonds: 8-12% per year
- Global equities (MSCI World): 14-16% per year
- Emerging market equities: 18-22% per year
- Gold: 15-18% per year
- Bitcoin: 60-80% per year
Does volatility decrease over time?
Annualised volatility remains constant regardless of the calculation period. But the probability of loss decreases with investment horizon. For the MSCI World, probability of negative performance is ~30% over 1 year, ~10% over 5 years, and historically near 0% over 20 years — the central argument for long-term equity ETF investing.
Check your ETF overlap
Enter two tickers to instantly see their overlap and avoid duplicates in your portfolio.
Open simulator