Expected Premiums and Tracking Error

What if factor investing in Canada became as simple—and affordable—as buying a single ETF?

In this episode, we are joined by Eduardo Repetto, CIO of Avantis Investors, and Caitlin Ebanks, Director of ETF Strategy at CIBC, to unpack the long-awaited launch of Avantis ETFs in Canada. This conversation explores how a partnership built on client-first principles and fee discipline is bringing sophisticated, evidence-based investing strategies to Canadian investors in a dramatically more accessible way.

We dive into the structure and philosophy behind the new ETF lineup, including how Avantis applies factor tilts, why implementation details like direct security ownership and low turnover matter, and how the new asset allocation ETF (CAGE) could simplify portfolio construction for DIY investors. Eduardo also shares insights into Avantis' research process, expected premiums, and the realities of tracking error, while Caitlin explains how CIBC is positioning these products within the Canadian ETF landscape.

This episode is a deep dive into the evolution of factor investing—covering product design, pricing, portfolio construction, and the broader shift toward low-cost, transparent investment solutions.

Key Points From This Episode:

(0:00:00) Introduction to the episode and the significance of Avantis launching ETFs in Canada.

(0:00:42) Why this launch marks a major step forward in accessibility for Canadian factor investors.

(0:02:52) Lower fees and simplified implementation remove key barriers to factor investing.

(0:04:55) Background on Eduardo Repetto and Caitlin Ebanks.

(0:08:12) Avantis surpasses $125B AUM and the drivers behind its rapid growth.

(0:10:20) How the Avantis–CIBC partnership came together and aligned on client-first pricing.

(0:13:04) CIBC's ETF strategy and rationale for partnering with Avantis.

(0:14:49) Overview of the Avantis ETF lineup launching in Canada.

(0:19:33) Fee structure, competitiveness, and expected MER approach.

(0:21:25) Eliminating operational cost uncertainty from investor fees.

(0:23:20) "Gas station sushi" and maintaining product quality.

(0:25:08) Why ETFs were chosen over mutual funds as the primary vehicle.

(0:28:29) Roles of Avantis and CIBC in managing and operating the ETFs.

(0:29:32) Direct security ownership vs. ETF-of-ETF structures and tax implications.

(0:31:23) Construction of the CAGE asset allocation ETF and its factor tilts.

(0:33:46) Expected outperformance (1.5–2%) and tracking error (3–4%) ranges.

(0:35:26) Transparency challenges and regulatory considerations in Canada.

(0:37:26) How CACE differs from the TSX through profitability and valuation tilts.

(0:40:13) Low turnover and tax efficiency considerations.

(0:42:05) Long-term commitment to the ETF lineup and viability concerns.

(0:43:44) Ongoing research and potential improvements to factor implementation.

(0:46:07) Current research focus: improving profitability forecasting.

(0:48:30) What excites Caitlin and Eduardo most about the launch.

(0:50:41) Why CAGE could transform how Canadians implement factor investing.

Links: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p

Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/

Rational Reminder on YouTube — https://www.youtube.com/channel/ Benjamin Felix — https://pwlcapital.com/our-team/

Benjamin on X — https://x.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Cameron Passmore — https://pwlcapital.com/our-team/

Cameron on X — https://x.com/CameronPassmore

Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)