Man Group: V-Shaped Recoveries Have Not Become More Frequent
An analysis from Man Group indicates that the sharp market rebound in April 2025 does not signal a structural shift in the frequency of V-shaped recoveries. Historical data suggests they remain as rare as before.
An investment firm's analysis challenges the notion that V-shaped market recoveries are becoming more common. While the S&P 500 index saw a rapid rebound in April 2025 after a more than 10% decline, research covering the period since 2000 suggests the frequency of such sharp and swift reversals has not increased.
The study defined a V-shaped recovery by tracking monthly cumulative returns for the MSCI World index. It identified the deepest V-shaped recoveries on a yearly basis. The findings revealed that the April 2025 recovery was among the steepest and fastest to date, comparable to major market downturns like the dot-com bust, the 2008 Global Financial Crisis, and the COVID-19 pandemic.
Furthermore, the research examined V-shaped recoveries exceeding 5% within a one-month period. While these occur more often during volatile market conditions, the analysis does not indicate a structural increase in their occurrence. Recoveries have been observed across various market environments, and the April 2025 event does not appear to mark a lasting change.
Man Group suggests that the perception of increased frequency might stem from a recency bias or frequency illusion, especially considering recent market events. While acknowledging the potential for increased market volatility, the firm believes investors will adapt to new information and policy shifts, potentially mitigating the risk of frequent, sharp V-shaped recoveries in the future.