XEQT Is Down 20%. Should You Sell, Hold, or Buy More?

Your XEQT balance is down 20% from its​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌​​‌‌‌‌‌‌‍‌‌​‌​‌​​​‌​​​​​​​‌​​​‌‌​​​‌‌‌‌‌ peak. You open the app, see the number, close the app, open it again hoping you misread it. You did not. The question forming in your brain right now is the most important investing question you will ever answer, because getting it wrong is how ordinary Canadians permanently destroy wealth that took years to build. So let’s settle this directly: you should almost certainly hold, and if you have cash available, buying more is the historically correct move. Selling is almost certainly wrong. Here is the evidence behind that answer.

What a 20% Drop Actually Means

A decline of 20% or more is the formal​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌​​‌‌‌‌‌‌‍‌‌​‌​‌​​​‌​​​​​​​‌​​​‌‌​​​‌‌‌‌‌ definition of a bear market. It sounds catastrophic, but the research says something different: bear markets are normal, periodic, and survivable. Research on long-run market cycles consistently shows that corrections of roughly 10% happen approximately every one to two years, bear markets of 20% happen roughly every five years, and crashes of 30% or more happen roughly every twelve years. In other words, a 20% drop is not an anomaly. It is a scheduled feature of owning equities, and one that was always priced into your expected long-run return.

XEQT is a globally diversified, all-equity​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌​​‌‌‌‌‌‌‍‌‌​‌​‌​​​‌​​​​​​​‌​​​‌‌​​​‌‌‌‌‌ ETF holding approximately 9,000 companies across the US, Canada, international developed markets, and emerging markets, at a management expense ratio of just 0.20%. When XEQT drops 20%, it means the broad global equity market has dropped roughly that amount. That is not a sign that XEQT is broken, that the strategy is failing, or that passive investing was a mistake. It means global equities are on sale.

Volatility is a feature of markets,​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌​​‌‌‌‌‌‌‍‌‌​‌​‌​​​‌​​​​​​​‌​​​‌‌​​​‌‌‌‌‌ not a bug. It should be expected from day one and factored into the plan before you invest the first dollar.

The problem is that this is very easy​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌​​‌‌‌‌‌‌‍‌‌​‌​‌​​​‌​​​​​​​‌​​​‌‌​​​‌‌‌‌‌ to agree with when you have zero money at stake, and very hard to feel when your TFSA balance has just dropped by $14,000.

Should You Sell XEQT When It’s Down?

No. Selling XEQT while it is down 20%​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌​​‌‌‌‌‌‌‍‌‌​‌​‌​​​‌​​​​​​​‌​​​‌‌​​​‌‌‌‌‌ is the single action most likely to permanently damage your financial future. Here is why that statement is so strong.

Decades of DALBAR data on investor behaviour​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌​​‌‌‌‌‌‌‍‌‌​‌​‌​​​‌​​​​​​​‌​​​‌‌​​​‌‌‌‌‌ show that the average equity fund investor earns roughly 2 to 4 percentage points less per year than the funds they are invested in. That gap is not caused by high fees, bad funds, or bad luck. It is caused almost entirely by one behaviour: selling during downturns and buying back in after the recovery is already underway. The investor who holds a fund that delivers strong long-run returns but who sells during every bad patch and buys back in after the bounce ends up with a materially lower personal return. Over 30 years, that difference is not a rounding error. It is the difference between retiring comfortably and working longer than you planned.

When you sell XEQT at a 20% loss, two​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌​​‌‌‌‌‌‌‍‌‌​‌​‌​​​‌​​​​​​​‌​​​‌‌​​​‌‌‌‌‌ things happen simultaneously. First, you lock in the loss. What was a paper decline becomes a real, permanent event, and a taxable one if held in a non-registered account. Second, you now have to make a second correct decision: when to buy back in. Research consistently shows that investors who exit during bear markets tend to wait too long to re-enter, missing the sharpest recovery days. The best single-day gains in any major recovery tend to cluster right around the lowest points. Miss those few days and your long-run return deteriorates substantially. There is no reliable way to know when those days will arrive.

Should You Hold? Yes. Here Is What That Actually Requires.

Holding is the correct answer, but it​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌​​‌‌‌‌‌‌‍‌‌​‌​‌​​​‌​​​​​​​‌​​​‌‌​​​‌‌‌‌‌ is not a passive act in a bear market. Holding requires a specific kind of discipline that most people underestimate until they are actually living through it.

You will see headlines saying this time​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌​​‌‌‌‌‌‌‍‌‌​‌​‌​​​‌​​​​​​​‌​​​‌‌​​​‌‌‌‌‌ is different. It is never different in the way the headline means. The Global Financial Crisis was supposed to be the end of capitalism. COVID-19 was supposed to cause a decade-long depression. The 2022 inflation spike was supposed to produce a prolonged and deep recession. In each case, investors who held through the panic came out ahead of those who acted on it. The US market compounded at a remarkable rate in the years following the March 2009 bear market bottom, across a period that included a global pandemic, negative oil prices, rapid rate hikes, and multiple sharp corrections. The recoveries that followed each of those events were powered in large part by the investors who held when holding was hard.

Holding also means stopping yourself​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌​​‌‌‌‌‌‌‍‌‌​‌​‌​​​‌​​​​​​​‌​​​‌‌​​​‌‌‌‌‌ from checking your balance daily. Watching a declining portfolio does not change the outcome. It only increases the psychological pressure to do something, and in this context, doing something usually means doing the wrong thing. Set a schedule: check once a month, or once a quarter. Continue your regular contributions if you have them set up on Questrade or Wealthsimple. Let the automatic nature of the strategy do the work that your nervous system cannot right now.

The investor who reacts emotionally​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌​​‌‌‌‌‌‌‍‌‌​‌​‌​​​‌​​​​​​​‌​​​‌‌​​​‌‌‌‌‌ to volatility is not investing anymore. They are speculating on their own ability to time a market that professional fund managers with full-time research teams consistently fail to time.

Should You Buy More? If You Can, Probably Yes.

If you have cash available, whether​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌​​‌‌‌‌‌‌‍‌‌​‌​‌​​​‌​​​​​​​‌​​​‌‌​​​‌‌‌‌‌ sitting in a high-interest savings account, a GIC that has just matured, or as new income you have not yet deployed, a 20% market decline is one of the better entry points available over a multi-year investing timeline. You are buying the same globally diversified portfolio of thousands of companies at a 20% discount to what buyers paid a few months ago.

This is dollar-cost averaging in its​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌​​‌‌‌‌‌‌‍‌‌​‌​‌​​​‌​​​​​​​‌​​​‌‌​​​‌‌‌‌‌ most meaningful form. When XEQT is at a lower price per unit, your regular monthly contribution buys more units. Each of those additional units participates fully in the eventual recovery. Research on bear market investing shows that investors who continued contributing through the 2020 COVID crash and the 2022 bear market ended up with lower average cost bases, which amplified their returns when markets recovered. Every bear market in recorded history has eventually recovered to new highs, and the investors who were still buying near the bottom captured the most powerful part of that move.

If you have a large sum of cash to deploy,​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌​​‌‌‌‌‌‌‍‌‌​‌​‌​​​‌​​​​​​​‌​​​‌‌​​​‌‌‌‌‌ the research slightly favours investing it as a lump sum over spreading purchases across several months, because markets tend to rise more than they fall over time. But if spreading your purchases helps you actually follow through rather than freeze with indecision, deploying in three or four tranches over a few months is far better than not buying at all.

The One Legitimate Reason to Reconsider Your Position

There is exactly one situation where​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌​​‌‌‌‌‌‌‍‌‌​‌​‌​​​‌​​​​​​​‌​​​‌‌​​​‌‌‌‌‌ this calculus changes, and it is worth addressing directly: if you genuinely cannot afford to have the money you put into XEQT unavailable for two to five years, then an all-equity portfolio was probably not the right allocation for you to begin with.

XEQT is 100% equities. It is designed for investors with a long time horizon, typically at least five years and ideally ten or more. If you need this money within two years for a house down payment, a major expense, or a planned life event, and you invested it in XEQT anyway, the right response is not necessarily to sell at a 20% loss today. But it is to acknowledge that your risk tolerance and your actual risk capacity were misaligned. Once markets recover, moving some of this money into a more conservative allocation would be appropriate. For a clearer picture of what XEQT is built for and whether it suits your situation, the complete XEQT guide is worth reading in full.

If, on the other hand, you are saving​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌​​‌‌‌‌‌‌‍‌‌​‌​‌​​​‌​​​​​​​‌​​​‌‌​​​‌‌‌‌‌ for retirement fifteen or twenty years from now and you are feeling panic today, that panic is emotional and not financial. Your financial situation has not changed. Your timeline has not changed. The global economy’s long-run trajectory has not changed. What changed is a number on a screen, and that number will look very different in five years in a way that will make today’s anxiety feel unnecessary in retrospect.

What XEQT’s Structure Does During a Bear Market

One underappreciated aspect of XEQT’s​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌​​‌‌‌‌‌‌‍‌‌​‌​‌​​​‌​​​​​​​‌​​​‌‌​​​‌‌‌‌‌ design is what happens internally during a market decline. Because XEQT holds four underlying iShares ETFs covering Canadian equities (XIC), US equities (XUU), international developed markets (XEF), and emerging markets (XEC), it is unlikely that all four will fall identically at the same time. Different regions and economies respond differently to different shocks. During a decline led by US technology stocks, Canadian energy or financials may hold up better. During a global economic shock, the relative performance across regions may vary. This built-in geographic diversification does not eliminate losses in a bear market, but it does mean you are not exposed to the failure of any single country, sector, or company.

XEQT also rebalances automatically among its underlying holdings. You do not need to take any action to maintain your target allocation. The ETF structure handles this continuously and invisibly. This is one of the practical advantages of a single-fund strategy during periods of market stress: there is literally nothing to do, which removes the opportunity to make an emotionally driven mistake. For more detail on exactly how this works and why it matters, the rebalancing explainer covers it thoroughly.

From a currency perspective, approximately​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌​​‌‌‌‌‌‌‍‌‌​‌​‌​​​‌​​​​​​​‌​​​‌‌​​​‌‌‌‌‌ 75% of XEQT’s holdings are denominated in non-Canadian currencies, with the US dollar being the dominant exposure. When global markets fall but the Canadian dollar also weakens, as it often does during risk-off periods, the CAD-denominated value of XEQT’s international holdings can partially offset the decline in equity prices. This is not a guarantee, but it is a structural feature that can soften the blow in some scenarios. As of recent data, one Canadian dollar buys approximately 0.72 US dollars, meaning unhedged US exposure does carry currency tailwinds for Canadian holders when the loonie is weak.

The 20% decline you are looking at right​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌​​‌‌‌‌‌‌‍‌‌​‌​‌​​​‌​​​​​​​‌​​​‌‌​​​‌‌‌‌‌ now is the price of admission for the long-run returns that make XEQT worth owning. There is no way to collect the return without sitting through the drawdown.

A Practical Checklist for Right Now

If XEQT is down 20% and you are reading​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌​​‌‌‌‌‌‌‍‌‌​‌​‌​​​‌​​​​​​​‌​​​‌‌​​​‌‌‌‌‌ this article, here is the concrete sequence of decisions worth working through.

Confirm your time horizon first. If​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌​​‌‌‌‌‌‌‍‌‌​‌​‌​​​‌​​​​​​​‌​​​‌‌​​​‌‌‌‌‌ the money is not needed for five or more years, you are in the right investment. Stay the course. If the money is needed in less than two years, this is a liquidity planning problem that predates the current market decline, and speaking with a fee-only financial planner about a transition plan makes more sense than panic-selling at the current price.

Next, check your registered account​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌​​‌‌‌‌‌‌‍‌‌​‌​‌​​​‌​​​​​​​‌​​​‌‌​​​‌‌‌‌‌ room. If you have unused TFSA or RRSP room and cash available, consider deploying it now. You are buying XEQT at a discount relative to recent prices, and your registered account space is a finite, annually renewable resource. Leaving TFSA room empty during a bear market is a compounding opportunity you cannot recover later.

Then turn off the noise. Unsubscribe​‌‌​‌​‌​​‌‌​​​‌​​‌‌‌‌​​​​‌‌​​‌​‌​‌‌‌​​​‌​‌‌‌​‌​​‍​​​​​​​​​‌​‌​​‌‌‌‌‌‌‍‌‌​‌​‌​​​‌​​​​​​​‌​​​‌‌​​​‌‌‌‌‌ from market news emails for the next 90 days if you need to. Delete the brokerage app from your home screen if you find yourself checking it compulsively. The market does not need your attention to recover, and your attention during a bear market is statistically likely to make things worse, not better.

Finally, keep your contributions going. If you have automatic purchases set up through Questrade or Wealthsimple, leave them running. A bear market is precisely when regular investing delivers its greatest value, buying more units at lower prices that will be worth more when the recovery arrives. If you have been thinking about whether your entry point even matters in the long run, the data on market timing makes a strong case for why it matters far less than your behaviour during downturns.

Frequently Asked Questions

Should I sell XEQT to avoid further losses? No. Selling locks in a temporary decline as a permanent loss and forces you to correctly time two decisions: when to sell and when to buy back in. Research consistently shows that investors who sell during downturns miss the fastest recovery days and end up with worse long-run outcomes than those who held through the decline.

How long does it typically take for a bear market to recover? Recovery timelines vary by the severity and cause of the decline. The 2020 COVID crash recovered to new all-time highs within months. The 2022 inflation-driven bear market took roughly a year and a half. XEQT’s global diversification means you are not dependent on any single economy recovering on any particular schedule. Historically, every bear market in broad global equity markets has eventually recovered to new highs and continued higher.

Is buying more XEQT while it’s down a good idea? If you have a long time horizon of five or more years and available cash or unused registered account room, buying more XEQT during a 20% decline is one of the more straightforward decisions in personal finance. You are purchasing the same diversified exposure to thousands of global companies at a meaningful discount. The main risk is emotional: if markets decline further before recovering, you need to be prepared to continue holding without selling.

What if this time really is different and markets don’t recover? If global equity markets across thousands of companies in dozens of countries permanently ceased to recover, no investment strategy would protect you, including bonds, GICs, gold, real estate, or cash. A scenario in which XEQT permanently fails to recover is a scenario in which the global economy has structurally collapsed in a way that no investment product survives intact. Within the range of realistic economic outcomes, diversified global equities have recovered from every historical bear market on record, including the Great Depression, multiple world wars, the 1970s stagflation, the dot-com collapse, and the 2008 financial crisis.