Please stay tuned for important disclosure information at the conclusion of this episode.

Welcome to Investing Insights. I'm your host, Ivana Hampton. Investing Insights is helping investors

navigate market volatility. Morningstar strategists and authors will deliver timely insights,

trends, and tips. These episodes will pop into your podcast feed. This year's uncertainty is

producing a somewhat surprising group of winning and losing asset classes, and they're still

two months to go in 2025. Many investors are rerouting their investments into different asset classes

because of geopolitical risk like the U.S. trade war, elevated inflation, and high interest rates.

A more recent development is the budget battle in Washington, D.C.

While the macro environment is pressure testing portfolios, it's also serving as a

reminder about the benefits of diversification. So which asset classes are leading and lagging

as 2025 prepares to wrap up and house the classic 6040 portfolio holding up. Morningstar Inc. portfolio strategist Amy R&D has examined

the data and is joining me to discuss her findings. It's good to see you, Amy. Good to see you too.

Well, market volatility has recently increased. What's been fueling it? Yeah, so we've seen a little

bit of an increase in market volatility in the past week or two,

and I think that was prompted by Trump's, President Trump's announcement of potentially much higher tariffs for China.

And then, as you mentioned in the intro, I think there's a little bit of a concern about all of these other factors like the budget battle, the government shutdown, concerns about economic growth and inflation.

So all of those things could be adding to volatility. but just to put things in perspective, whenever we're

talking about market volatility, people like to use the VIX index, which is a way of measuring

the market's expectations for future volatility. And if you go back to 1990, when the VIX index started, the average is about 19 or 20.

So if you have VIX readings, you know, in the low 20s or so, which is more like what we've been

seeing recently, it's not terrible. And I think it's also maybe a healthy reminder that volatility is part of

investing and something you have to live with as a long-term investor. And I think earlier this

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