UBS Cites 14% Annual Drawdown and 72% Gain Frequency in SP500
UBS notes that since 1981 the S&P 500 has experienced an average 14% maximum annual drawdown yet delivered gains in roughly 72% of calendar years and that VIX spikes often precede above-average 12-month returns. The bank warns missing just the S&P 500’s best week or quarter substantially reduces long-term gains.
1. UBS Historical Market Analysis
UBS highlights that since 1981 the S&P 500 has averaged a 14% maximum drawdown within any given year yet closed positive in about 72% of calendar years. The bank also points out that when the VIX volatility index rises to elevated levels, the S&P 500 has historically delivered above-average returns over the following 12 months.
2. Cost of Market Timing
UBS warns that attempting to time market exits and entries can significantly erode long-term gains. For instance, a hypothetical $100 investment in the S&P 500 since 1989 would have grown substantially by early 2026, but missing just the index’s best week or quarter would have slashed overall returns by a large margin.
3. Diversification and Risk Management
Rather than exiting equities, UBS recommends maintaining a diversified portfolio that blends broad equity exposure with quality fixed income, gold and alternative strategies. This mix is designed to manage downside risk during periods of heightened volatility while preserving growth potential.