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More than a decade ago, when I first started talking to clients and prospects about the benefits of investing with ETFs, one question that often came up was, “If an ETF follows the underlying market index, then it will go all the way down when the market corrects. Isn’t that too volatile for me at my age?”

Turns out, clients had good reason to ask: ever since the Great Recession of 2008-2009, market volatility has increased. During the pandemic, we saw the longest bull market in history end with the shortest bear market in history (33 days — a lot shorter than the median of 302 days, according to Yardeni Research data).

Even when a client’s risk profile indicates they can have a sizeable equities allocation, they may be hesitant.

When talking to my clients about the worst-case scenario with investing in equities, I often use the 2008-2009 recession to illustrate that even if you invested right before the 14-month long bear market, most investors made their money back within four years if they just held on to what they owned.

In the gut-wrenching market plunge of the that ended the 10-year bull run in March 2020, the S&P/TSX Composite dropped 37.2% in just 22 days, mirroring markets worldwide. Yet, by yearend, many markets were boasting all-time highs. If ever there was a time to validate a buy-and-hold strategy using ETFs, it was 2020. Trying to be in and out of the market to sidestep volatility was next to impossible.

According to my firm’s U.S. equities research team, during the 253 trading days of 2020, the S&P 500 closed up or down at least 1% more than 100 times, compared to only 37 days in 2019. Those daily swings included two rallies of more than 9%, as well as a ~12% decline. Similarly, data from FactSet show that if you missed the 20 best trading days of the past 15 years for the S&P 500, your return would be a negative 1% versus 7.5% if you remained in the market for the full period.

Although 2020 could have been an opportunity for stock-pickers to shine, S&P’s Indices Versus Active mid-year scorecard for 2020 showed that wasn’t the case. As the report notes: “88% of Canadian equity funds underperformed their benchmarks over the past year, in line with the 90% that did so over the past decade. This shortfall was not an outlier, as in six of seven categories, a majority of funds fell short of their benchmarks in the past year, and at least two-thirds of funds did so in every category over the past 10 years.”

I’m not trying to pit passive against active management, but instead pointing out that by just following the broad market index, plain-vanilla ETFs do a good job at generating return in a diversified portfolio of ETFs over time.

If your clients are worried about the time needed to make their money back after a major correction or bear market, you could encourage them to reflect on what is causing them to worry. Is it the time it takes for markets to rebound, their age, or a combination of both?

The pandemic has a lot of people rethinking the type of work they do, where and how they do it, and how long they do it — something I call “opting for re-wired over retired.” Stretching out the income-producing years gives investors additional time to weather the fluctuations of equities markets while giving them the flexibility to consider other options.

Clients using a well-diversified ETF strategy have time on their side. They can recuperate paper losses by not selling, and quite possibly more quickly than expected. Ensuring they manage their emotions is paramount (as explained in this past column), as is assessing their cash requirements.

Clients who cannot stomach equities need not avoid ETFs altogether. For example, fixed-income and high-interest savings ETFs may work for them.

For clients who are no longer earning income and are living off investments, having a strategically managed cash or cash-equivalent reserve buys them the time needed to wait out the storm in equity markets.

Cash will always be king when it comes to short-term expenses and income needs, but equity ETFs can still have a place in a longer-term wealth building strategy at almost every age.