Vanguard views August market volatility as 'ordinary'

Count Vanguard Group among those unfazed by the whipsawing stock market.

The Malvern-based mutual fund giant certainly noticed the spike in volatility last month when the widely watched Standard & Poor's 500 index moved up or down 2.5 percent every day between Aug. 5 and Aug. 30.

While reluctant to play the cause-and-effect game, Vanguard turned to history for guidance on whether or not the recent market volatility is exceptional. Its researchers conclude the ups and downs are quite ordinary compared with what occurred during the 2008 global financial crisis and the period following the 2001 terrorist attacks.

What all of these bouts of volatility have in common is that they occurred when "global macro events" dominated the news. In August, the U.S. debt-ceiling debacle played out while the European sovereign debt crisis reignited investor fears.

"As a result, we would argue that August's volatility in equities, although high and painful to many investors, was not unexpected, given the market environment and the widespread repricing of risk," Vanguard said a note this week.