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Emotional rescue?

In late August the S&P500 Index® rallied to an all-time high. Predictably, market commentators and pundits high-fived, and Twitter feeds everywhere cheered another impressive milestone: the longest bull run in history, dating back to the March 2009 lows.

But remember, when times are good it’s best to have a plan for the inevitable downturns. In fact, protracted downturns often incite emotional investing decisions that can have potentially destructive ramifications on returns and long-term investment objectives. But don’t take my word for it. There’s an entire field of Behavioral Economics that studies the effects of psychological and emotional investment decisions. The urge to sell stocks when they go down is very strong, especially during times of tumult. Conversely, investors often don’t have the stomach to buy after the market plummets and losses are fresh in their mind. This is just human nature.

To put it simply, many humans are hard-wired to buy high when everything feels good and sell low when times look bleak, which is often the exact opposite of what many people's investment plans call for. So how can investors save themselves from themselves?

One possible solution is to employ a systematic, disciplined approach that provides exposure to stocks with a built-in mechanism to shift allocations and raise cash depending on market conditions. So when stocks fall to a certain level, reallocating to cash may be an important first step to help limit steep losses associated with protracted downturns. But that’s only half the battle. It’s also imperative for many investors to have a plan to step in and methodically reinvest after stocks go down.

Establishing clear rules and having the discipline to stick to the plan is not easy, and admittedly it’s even harder in turbulent times when we tend to be bombarded with dire news. Fortunately for investors, there are some investment products that may help eliminate the temptation to make emotional decisions. These rules-based products may be appropriate for investors seeking equity exposure with some level of downside management. And they also might help any investors who have become uncomfortable with stock valuations or leery of elevated levels of market volatility. Of course careful due-diligence is important, and investors should not only consider the exit and reinvestment methodologies of such products carefully, but also their associated fees and expenses.

An investor should consider the fund’s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information about the fund can be found in the fund’s prospectus, or, if applicable, the summary prospectus. To obtain a copy, click here. Read the prospectus carefully before investing. 

Investing involves risk, including the potential loss of principal. Diversification and asset allocation do not guarantee a profit or protect from loss in a declining market. There is no guarantee that a strategic beta strategy will be successful. There can be no assurance that performance will be enhanced or risk will be reduced for funds that seek to provide exposure to certain quantitative investment characteristics (“factors”). Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods. In such circumstances, a fund may seek to maintain exposure to the targeted investment factors and not adjust to target different factors, which could result in losses. The annual management fees of ETFs may be substantially less than those of active mutual funds. Buying and selling shares of ETFs will result in brokerage commissions, but the savings from lower annual fees can help offset these costs. Active funds typically charge more than index-linked products for the increased trading and research expenses that may be incurred. 

VictoryShares ETFS are distributed by Foreside Fund Services, LLC. Victory Capital Management Inc. is the adviser to the VictoryShares ETFs. Victory Capital is not affiliated with Foreside Fund Services, LLC.

NOT A DEPOSIT • NOT FDIC OR NCUA INSURED • MAY LOSE VALUE • NO BANK OR CREDIT UNION GUARANTEE

©2018 Victory Capital Management Inc.
An investor should consider a fund’s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information about funds can be found in the fund’s prospectus, or, if applicable, the summary prospectus. To obtain a copy, visit the ETF prospectus page or Mutual Fund prospectus page. Read a prospectus carefully before investing.

Investments involve risk including possible loss of principal. The value of the equity securities in which the fund invest may decline in response to developments affecting individual companies and/or general economic conditions. Dividends are never guaranteed. International investing involves special risks, which include changes in currency rates, foreign taxation and differences in auditing standards and securities regulations, political uncertainty, and greater volatility. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. You may lose money by investing. There are no guarantees the funds will achieve their investment objectives and strategies may be unsuccessful.

ETFs have the same risks as the underlying securities traded on the exchange throughout the day. Redemptions are limited and often commissions are charged on each trade, and ETFs may trade at a premium or discount to their net asset value. There can be no assurance that an active trading market for shares of an ETFs will develop or be maintained. The ETFs are not actively managed and may be affected by a general decline in market segments related to the Indexes. The ETFs invest in securities included in, the Index, regardless of their investment merits. The performance of the ETFs may diverge from that of the Indexes. 

LinkedIn, Twitter, and any other social media platform are owned by third parties unaffiliated with Victory Capital. Victory Capital is not responsible for the privacy or security policies at these sites or other third party sites to which they provide further links. For Victory Capital’s privacy policy, please visit the Policies page on www.vcm.com. Please do not post any information you wish to keep private on this page.

Victory Capital does not endorse and is not responsible for any ads, content, products, advice, opinions, recommendations or other material of third party sites that may be promoted via advertising within social media properties.

This material does not constitute a distribution, offer, invitation, recommendation, or solicitation to sell or buy any securities; it does not constitute investment advice and should not be relied upon as such.  Investors should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision.

Mutual funds distributed by Victory Capital Advisers, Inc. ("VCA"). ETFs distributed by Foreside Fund Services, LLC. Victory Capital Management Inc. is the adviser to the VictoryShares ETFs and Victory Funds. Victory Capital is not affiliated with Foreside Fund Services, LLC.

Nasdaq is a registered trademark of Nasdaq, Inc. and its affiliates (together,“Nasdaq”) and is licensed for use by Victory Capital. The product(s) are not issued, endorsed, sold, or promoted by Nasdaq. Nasdaq makes no warranties as to the legality or suitability of, and bears no liability for, the product(s). Nasdaq is not affiliated with a fund or advisor.

For specific questions about your account or other customer-service related inquiries, please contact Victory Capital directly.