XEQT and VFV Fell This Week. Should You Sell?

XEQT and VFV dropped sharply this week. Before you do anything, read what history says about every other time Canadian investors panicked.

⚠️ This is educational content, not investment advice. Please consult a qualified financial advisor for guidance specific to your situation.

The Urge to Do Something Is the Problem

Your portfolio is down. The number is red. It is a bigger red number than you have seen in a while, and every instinct you have is telling you to act - to sell, to wait for things to calm down, to move to cash and re-enter when it feels safer.

That instinct is understandable. It is also the single most expensive mistake a long-term investor can make.

This article is not going to tell you what to do with your portfolio. What it will do is show you exactly what happened this week, why it happened, why your losses may be worse than a friend who holds different ETFs, and what history says about every single time this has happened before.

The data is worth reading before you make any decisions.

What Actually Happened This Week

On Friday June 5, 2026, markets sold off sharply across the board. XEQT dropped approximately 1.89% in a single session - running at three times its recent average daily move. VFV and the broader S&P 500 fell 2.64% on the day. The Nasdaq had its worst single day since the April 2025 tariff crash, losing 4.18%.

The TSX dropped 658 points on Friday alone, closing at 34,413 after opening at 35,071. Metals and mining - one of Canada's most represented sectors - fell 8.86% for the week. The S&P Venture Exchange dropped 6.28%.

Two things triggered it:

Catalyst 1 - Broadcom's AI chip outlook disappointed.

On Wednesday night, Broadcom reported earnings but declined to raise its AI chip revenue forecast. Markets had priced in continued AI infrastructure expansion. When that expectation was not confirmed, chip stocks sold off aggressively on Thursday - and the selling accelerated Friday as it spread across the sector.

Catalyst 2 - A stronger-than-expected jobs report killed rate cut hopes.

The US economy added 172,000 jobs in May, nearly double the consensus forecast of 80,000. Under normal circumstances, strong job creation is good news. But in 2026, good economic data has a complicated relationship with markets. Stronger employment means the Federal Reserve has less reason to cut interest rates. Higher rates for longer make bonds more attractive relative to equities and raise borrowing costs for growth companies - exactly the type of companies that dominate VFV and the US sleeve of XEQT.

Bond yields spiked on the jobs report. Technology stocks - already under pressure from the Broadcom news - sold off further. The selling was broad, fast, and hit global markets simultaneously.

The VIX, the market's fear gauge, jumped to 21.51. Anything above 20 signals elevated market anxiety. The Canadian dollar fell to 1.39 against the US dollar.

Why Your Portfolio Might Have Fallen Harder Than You Expected

If your losses this week felt larger than the headline numbers suggest, there are two likely reasons.

Reason 1: Sector concentration in tech and semiconductors.

Both XEQT and VFV carry significant exposure to the technology sector. VFV is the more concentrated of the two - information technology alone represents roughly 33% of the S&P 500, and the Magnificent Seven stocks (Nvidia, Apple, Microsoft, Amazon, Alphabet, Meta, Tesla) control approximately 34% of the entire index.

This week's selloff was concentrated in exactly those names. Chip stocks - Nvidia, Broadcom, and the broader semiconductor sector - led the decline. If VFV represents a meaningful portion of your portfolio, you were sitting in the epicentre of this week's selling.

XEQT is more insulated than VFV because its global diversification dilutes any single sector's impact. But the US sleeve of XEQT still accounts for roughly 45% of the fund - and that sleeve is still heavily weighted toward the same technology stocks.

The Canadian materials sector added further damage for XEQT holders with significant Canadian equity exposure. Gold fell 3.36% and copper fell 4.01% on Friday, dragging Canadian materials stocks down 6.74% for the session.

If you are holding both XEQT and VFV in the same portfolio, the combined effect may have pushed your true US technology exposure significantly above what either fund's label suggests. We explored this in detail in a previous article: XEQT and VFV: Why Holding Both Is a Mistake (2026).

Reason 2: The S&P 500 has become more concentrated than at any point in modern history.

The top 10 holdings in the S&P 500 now control roughly 40% of the entire index - a level of concentration higher than at the peak of the dot-com bubble in 2000. When the companies that account for 40% of an index all sell off together, as happened Friday, the index move is amplified far beyond what a truly diversified portfolio would experience.

This is the structural concentration problem in VFV that many new investors have not fully absorbed. We covered it in detail here: The Concentration Problem in VFV - A Canadian Investor Guide.

What History Actually Says About Weeks Like This

This is the part that matters most.

Here is every significant drawdown XEQT has experienced since its August 2019 launch, and what happened after:

XEQT has delivered approximately 13.95% annualized since its 2019 inception. That number includes every one of those drops. It includes the 30% COVID freefall. It includes the slow grind of 2022. It includes the tariff shock of 2025.

Five out of its six full calendar years have been positive. The one negative year was 2022, when it fell 10.93%.

Every investor who held through those drops recovered. Every investor who sold near the bottom locked in losses and then faced the harder decision of when to get back in - usually too late, after missing the sharpest part of the recovery.

The broader data on the S&P 500 going back to 1950 tells the same story. Since 1980, the market has declined 10% or more approximately every 1.2 years. Corrections are not rare. They are routine. The average recovery time from a correction is roughly four months.

More specifically: of the 15 market corrections the S&P 500 has experienced over the past 30 years, the benchmark index has typically produced strong returns in the twelve months that followed the correction entry point. In 11 of those 15 instances, returns over the following year were positive - often meaningfully so.

The March 2020 COVID crash is the most dramatic example. The S&P 500 dropped 34% from peak to trough. It recovered completely within five months. By December 2020, it was 16% above its pre-COVID peak. The four-year total return from the March 23 bottom exceeded 150%.

The investors who sold in March 2020 to "wait for things to settle down" missed the single best buying period in a decade. Research shows that roughly 78% of the market's best individual trading days occur during bear markets or in the first two months of a new bull market - which is exactly when most nervous investors are sitting in cash.

The Most Dangerous Move: Selling to Wait for Calm

The math on market timing is brutal and consistent.

If you sell after a drop, you need to make two correct decisions - not one. You need to correctly identify when it is safe to sell, and then correctly identify when it is safe to buy back in. Missing just 10 of the best trading days in a 20-year period can cut your total return by more than half.

The days that feel the most dangerous are disproportionately likely to be followed by the sharpest recoveries. This is not optimism. It is a statistical pattern observed across 150 years of market data.

This week's selloff - driven by a chip earnings miss and a strong jobs report - is meaningful. It is not comfortable to watch. But it is not structurally different from the dozens of sharp corrections that preceded it, each of which felt permanent at the time and none of which were.

What You Can Actually Do Right Now

This article is not investment advice. But there are a few things any investor can consider that do not involve selling.

Understand what you actually own.

If this week's drop surprised you in terms of its size, it may be worth checking your actual sector and geographic exposure. If you hold both XEQT and VFV, your combined US technology exposure is likely higher than you realize. Use the ETF Overlap Checker to see exactly what your combined holdings look like.

Check that your account structure makes sense.

Sometimes the pain of a drawdown is the right moment to review whether your ETFs are in the most tax-efficient accounts. The Account Type Optimizer walks through the TFSA, RRSP, and taxable account decision based on your specific situation.

Do nothing, deliberately.

This is harder than it sounds. Doing nothing when your portfolio is red requires the same intentionality as any other investment decision. The data overwhelmingly supports it for long-term investors with 10+ year time horizons.

Add if you were planning to anyway.

Many long-term investors view corrections as the routine buying opportunities that the historical data suggests they tend to be. If you had contributions planned, a down week does not change the logic of those contributions.

The One Question Worth Asking Yourself

Before you do anything with your portfolio this week, there is one question worth sitting with:

Has anything about your actual investment thesis changed?

If you bought XEQT because you believe in long-term global equity returns and wanted a low-cost, diversified, automatically rebalanced portfolio - none of that changed on Friday. The fund still holds 9,000 companies across 50+ countries. It still charges 0.20% MER. It still automatically rebalances.

If you bought VFV because you wanted exposure to US large-cap equities over a 10+ year horizon - none of that changed either. The 500 largest American companies are still operating. Nvidia is still generating billions in revenue. The AI infrastructure build-out is still ongoing.

A week of selling driven by a chip earnings miss and a surprise jobs report is news. It is not a change in investment thesis.

The investors who build meaningful wealth over decades are not the ones who found the perfect time to sell. They are the ones who stayed invested through the times when selling felt like the obvious answer.

Frequently Asked Questions

Should I sell XEQT or VFV when the market drops?

This is educational content and not investment advice. What the historical data shows is that investors who have sold during corrections have generally missed subsequent recoveries. Since XEQT's 2019 launch, every significant drawdown - including a 30% COVID crash - has been followed by a full recovery and new highs for investors who held. The decision is ultimately personal and depends on your time horizon, risk tolerance, and financial situation.

Why did XEQT fall more than I expected this week?

XEQT fell approximately 1.89% on Friday June 5 - roughly three times its recent average daily move. The US sleeve contributed the largest drag, driven by a selloff in technology and semiconductor stocks following Broadcom's earnings and the May jobs report. The Canadian materials sleeve also weighed on the fund as gold and copper fell sharply. If you hold XEQT alongside VFV, your combined technology exposure may be higher than either fund's label suggests - see our XEQT and VFV overlap article for the full breakdown.

Is this drop different from previous market corrections?

Every correction feels different in the moment. This one was triggered by sector-specific news (chip stocks) amplified by a macro surprise (strong jobs data). The pattern - sharp selling driven by a catalyst, followed by anxiety about what comes next - is structurally similar to every correction that preceded it. The S&P 500 has experienced corrections of 10% or more approximately every 1.2 years since 1980. Average recovery time is roughly four months.

Why is VFV falling so hard?

VFV tracks the S&P 500, which is currently more concentrated in technology than at any point in the past 50 years. The top 10 holdings control roughly 40% of the index. When chip stocks and tech names sell off - as they did this week - the index move is amplified because those companies represent such a large share of the total. This is the core concentration risk we explored in detail in The Concentration Problem in VFV.

What is a normal drop for XEQT or VFV?

Both funds are 100% equity - there are no bonds to cushion drawdowns. XEQT has experienced corrections of 30% (COVID 2020) and 10.93% (2022) since launching in 2019. VFV, tracking only US large-caps, has experienced similar or larger drawdowns. A 2% single-day move, while uncomfortable, is within the normal range of volatility for all-equity funds. Investors who cannot tolerate this level of short-term volatility may want to consider a balanced all-in-one ETF that includes bonds to reduce drawdown depth.

This is educational content, not investment advice. Please consult a qualified financial advisor for guidance specific to your situation.

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