CAGE Explained: The Factor-Tilted Alternative to XEQT

CAGE launched in March 2026 and has generated more questions from readers and viewers than any fund since XEQT. This page collects my answers in one place, organized around the questions that come up most often.

Full disclosure up front: I hold 100% CAGE in my own portfolio. Nobody pays me to write about it, CIBC and Avantis have no idea who I am, and by the end of this page I will still tell most beginners to buy XEQT instead. That should tell you something about how honest I intend to be here.

Last updated July 14, 2026. Figures come from the CIBC fund documents and the April 30, 2026 monthly field guide, and will drift over time. Check the fund page for current numbers.

📑 On this page

• What is CAGE?
• What’s actually inside it?
• Are the tilts the manager’s opinion, or a formula?
• Why would cheap and profitable companies earn more?
• What extra return can I actually expect?
• Is the MER high?
• I hold XEQT and CAGE together. Is the overlap bad?
• What about XEQT plus CASV instead?
• How does CAGE compare to FEQT and NMEQ?
• Why I moved my own money from XEQT to CAGE
• How do you build enough conviction?
• The best case against all of this
• Will CIBC shut these funds down?
• So should you buy it?
• Where to go deeper

What is CAGE?

CAGE (Avantis CIBC All-Equity Asset Allocation ETF) is a globally diversified, 100% equity, all-in-one ETF, the same species as XEQT or VEQT. The difference is that instead of holding companies in proportion to their market size, it tilts toward companies with lower prices relative to their fundamentals and higher profitability. It is run by Avantis Investors, a team founded by former Dimensional Fund Advisors leaders including Eduardo Repetto, and brought to Canada through a partnership with CIBC.

One structural detail worth knowing: some Canadian ETFs just wrap a US-listed fund, which adds a layer of withholding tax. CAGE’s underlying ETFs buy their stocks directly, which Eduardo Repetto confirmed was a deliberate choice for Canadian investors on the Rational Reminder podcast (episode 401). And on fees, CIBC’s Caitlin Ebanks made two commitments in that episode: operating costs are absorbed rather than passed to you, and CAGE does not double-charge you for the CIBC ETFs it holds inside.

What’s actually inside it?

The target mix is five Avantis funds: 39.4% US equity (CAUS), 30% Canadian equity (CACE), 17.6% international developed (CADE), 8% global small-cap value (CASV), and 5% emerging markets (CAEM). Canada is fixed at 30%, and the rest floats with global market caps rather than being locked at launch weights. The 8% small-cap value sleeve is the deliberate extra kick of factor exposure on top of the tilts already inside each regional fund.

What do the tilts look like in practice? From the April 30, 2026 field guide, compared to its benchmark (MSCI ACWI IMI): the average company in CAGE is about half the size ($633B vs $1,217B weighted average market cap), noticeably cheaper (0.35 book-to-market vs 0.23), and the portfolio holds about 28% in the cheap-and-profitable bucket versus 21% for the benchmark, funded by holding less of the expensive-and-unprofitable bucket.

The sector consequences follow directly, and this surprises people: as of that guide, CAGE held about 14% in information technology versus 27% for the benchmark, and more in financials, energy and materials. Does this mean CAGE systematically underweights big growth tech? Yes, that is exactly what it means. Companies priced at huge multiples of their book value with modest current profitability are, by this methodology, lower expected return, so they get less weight, not zero weight. If tech mega-caps keep dominating, CAGE will trail XEQT. That is not a bug. That is the bet, stated plainly.

If you want to see exactly which companies you own, including every small cap: holdings and fund documents are published on CIBC’s ETF pages. Start with CAGE’s own fund page. Its dedicated small-cap sleeve is CASV, so CASV’s fund page is where the small caps live, and the regional funds hold their own small and mid caps on top of that. The monthly field guide, linked under fund documents on those same pages, summarizes the characteristics if you want the picture without scrolling five thousand tickers.

Are the tilts the manager’s opinion, or a formula?

A common question: when CAGE decides which companies to overweight, whether on value, profitability, or size, is that someone’s judgment call or a set rule? The answer is that it is formulaic, but every firm builds its own formula. Avantis scores companies primarily on price relative to fundamentals (adjusted book value, earnings, cash flow) and on profitability. Cheap and profitable companies get overweighted, expensive and unprofitable companies get underweighted. Repetto described the shift as roughly 15% of the portfolio moved from the low-expected-return group to the high-expected-return group, with stronger tilts in mid and small caps where the expected premiums are larger, and outright exclusion of the worst combinations among small caps.

So no one at Avantis is sitting in a room deciding they like Enbridge this quarter. But the design of the formula, which metrics, how they are combined, how trading costs are managed, is absolutely human judgment, and it differs between Avantis, Dimensional, and everyone else. That is why “do I trust this team’s implementation” is a real part of the decision, not just “do I believe in factors.”

Why would cheap and profitable companies earn more?

The academic story, going back to Fama and French’s 1992 research, is that company size and price-to-fundamentals explain differences in stock returns better than market exposure alone. The explanation I find most useful is the risk one. Value companies tend to be more exposed to economic distress: more leverage, more irreversible capital tied up in physical things, and they often do badly at exactly the moments investors most need stability. Investors demand a higher expected return as compensation for holding that. The value premium is not free alpha. It is payment for a risk you agreed to carry.

That framing matters because it sets expectations correctly. If the premium were free money, everyone would grab it and it would vanish. Because it is compensation for risk (and maybe partly for behaviour most people cannot stomach), it can persist, and it can also spend a decade underwater, which is the same thing said twice.

What extra return can I actually expect?

On the Rational Reminder, Repetto put the expected outperformance of CAGE over a geographically matched market-cap portfolio at roughly 1.5 to 2% per year, with tracking error of 3 to 4%. Before anything else, consider the source: Repetto is the fund’s chief investment officer, so this is the builder quoting his own product’s expected premium. That does not make the number wrong, but it does make it the optimistic end of the range rather than a neutral estimate. Ben Felix immediately added the caveat that I would tattoo on this whole subject: that is a model-based expected premium, not a schedule. The realized outcome will be noisy, and factor-tilted portfolios have historically gone through stretches of 10 to 15 years of underperformance. If you read my cheatsheet’s section on how expected returns are estimated, you already know how much uncertainty lives inside a number like that.

For calibration, it helps to look at what people with no product to sell assume. PWL Capital, whose advisors actually use factor-tilted portfolios with their own clients, builds financial plans on factor-tilted equity returns only a few tenths of a percent above their plain market-cap assumptions. So the honest range runs from roughly 0.3% (the independent planner’s budget) to 2% (the builder’s estimate), and a reasonable prior sits closer to the low end. There is also a structural reason to haircut published premiums: McLean and Pontiff’s study of 97 documented return predictors found returns were 26% lower out-of-sample and 58% lower post-publication. The field measured its own decay. Any planning number should assume some of it.

And on whether a positive expected premium contradicts a possible decade of underperformance: it does not, and this is worth internalizing because it applies to all of investing, not just factors. Fama and French’s “Volatility Lessons” (2018) estimated that even the broad equity premium, the one every index investor is betting on, comes up negative in about 16% of 10-year periods and 8% of 20-year periods, with similar or worse odds for the size and value premiums. An expected return is the average of a wide distribution, not a schedule. If a premium could not disappoint you for a decade, it would not be risky, and if it were not risky, it would not pay. Finally, this is not all resting on one 1992 paper: the profitability factor CAGE leans on entered the literature through research from 2013 to 2015, and the premiums have since been tested out-of-sample, across countries, and through large-scale replication studies. The evidence base is newer, and more self-critical, than most people assume.

If this still feels abstract, my cheatsheet has a coin flip simulator built for exactly this confusion: twenty people flip a coin with a precisely known expected value, and their outcomes still scatter wildly, including long stretches below expectation. A factor premium is that coin with murkier odds and only a handful of meaningful flips per decade. The expected return sets the slope of the average line. It never tells you which line is yours.

Translation: the people who built CAGE expect it to beat XEQT by 1.5 to 2% per year on average, and it is fully capable of losing to it for a decade anyway. Both halves of that sentence are the deal. You do not get one without the other.

Is the MER high?

This comes up constantly, and my answer is blunt: I do not think the MER is even high. XEQT’s management fee is 0.17% (MER 0.20%). CAGE’s management fee is 0.28%, so the expected all-in gap is roughly 0.12% per year, or about $12 per year per $10,000 invested. It is also cheap compared to nearly every other factor product available. The real question is not the fee, it is whether you have conviction in Avantis’ methodology and implementation.

For context from the people who negotiated it: Repetto and Ebanks spent a good chunk of the podcast on fee discipline, including walking away if they could not price it fairly. You can be skeptical of marketing talk, but the sticker price backs it up. Factor funds in Canada used to cost several times this.

I hold XEQT and CAGE together. Is the overlap bad?

Holding both makes some investors uneasy because the funds overlap heavily, something like 90% similar exposure. My honest answer: I do not think overlap is a big deal at all, depending on why you are doing it. Overlap is not double-charging you and it is not hidden risk. A 50/50 XEQT/CAGE portfolio is simply a portfolio with half the factor tilt of CAGE, which is a perfectly coherent thing to want.

If you hold both because you want the tilt but could not bring yourself to go all the way, that is fine. Hesitancy expressed as a smaller position is a feature, not a sin. The only real cost is a little extra rebalancing and mental accounting. Unless you want a true set-it-and-forget-it portfolio you will not touch for years, in which case pick one and move on.

What about XEQT plus CASV instead?

A smarter version of the overlap question: since a lot of CAGE’s difference comes from small-cap value, why not hold XEQT as the core and add CASV (the global small-cap value fund) directly, paying the higher fee only on the explicit tilt? I called this a sensible in-between option, and I stand by that. But there is a counterpoint that completes the picture: CAGE tilts toward value and profitability across large, mid, and small caps. XEQT plus CASV gets you the small-cap value kick and none of the large and mid-cap factor loadings. It is not a cheaper version of the same exposure. It is a different, narrower exposure at a lower blended fee.

Neither is wrong. It is a trade-off between completeness of the tilt and cost, and which side you land on depends on how much of the Avantis approach you actually want.

How does CAGE compare to FEQT and NMEQ?

CAGE is not the only “fancier all-in-one” in Canada, and two others come up in the same conversations. The closest real comparable is FEQT, Fidelity’s all-equity all-in-one. It also uses systematic factor sleeves, but with a different philosophy: it spreads roughly 97% of the fund across four factor styles (momentum, value, quality and low volatility) in Canada, the US and international markets, and holds a neutral 2.5% slice of bitcoin (allowed to range between 0.5% and 3%), at an MER of 0.43% per its latest report. So the choice between CAGE and FEQT is really two questions: do you prefer a concentrated bet on value and profitability backed by the Avantis research lineage, or a diversified spread across four factors, and do you want a small crypto position bundled into your equity fund or not. Neither answer is crazy. They are different bets, and you should know which one you are making.

NMEQ is a different animal, and it is worth being precise here because it gets lumped in with factor funds. NMEQ is the Meritage Tactical ETF Equity Portfolio from National Bank, and the key word is tactical: managers actively adjust the portfolio based on their views of market conditions. That is not systematic factor exposure. It is a bet on a team’s ability to time allocation shifts, which is exactly the kind of skill the evidence says is hard to sustain. A factor tilt says “these characteristics carry persistent risk premiums.” A tactical fund says “we can tell when to zig.” Those are fundamentally different claims, and the research treats them very differently.

For any alternative all-in-one, the questions are the same three from my cheatsheet: what does it change about your exposure compared to plain market-cap weighting, what does it cost, and do you trust the implementation enough to hold through the inevitable stretch where it trails XEQT. CAGE is the one whose specific bet I chose to take. Your answer can be different and still be right.

Why I moved my own money from XEQT to CAGE

I held 100% XEQT for about five and a half years and recommended it to everyone who asked. I still do, for beginners. I moved my own portfolio to CAGE because after years of following the research, I concluded the factor tilts offer a higher expected return for a level of risk I am comfortable with, implemented by a team I trust, at a fee that does not eat the premium. That is the whole cheatsheet framework, highest expected return at a risk level you can live with, applied to my own situation.

Two things from my background do real work here. I come from competitive games, poker especially, so I am comfortable making decisions with incomplete information and then not judging the decision by a short sample of results. The future is uncertain. The research says factor exposure likely provides a premium. That “likely” is as good as it gets in investing. And second, I genuinely believe past performance is not predictive, because prices are set by buyers and sellers betting on future expected returns. Recent underperformance is noise to me, not evidence.

What would change my mind? New research that seriously undermines the factor premiums. Not a bad year, not a bad five years. That is the conviction bar this strategy requires, which brings us to the hard part.

How do you build enough conviction?

The hardest question in this whole topic sounds something like: “I have watched the videos and skimmed the papers, but I feel like I am missing something seasoned investors have.” My answer is that you are not missing anything. There is no extra fact, and there is no secret. What seasoned investors have is comfort making the best decision available with imperfect information, and accepting that it still might not work out. The research cannot promise the premium will show up. It can only say factor exposure likely provides one, and “likely” is as good as investing ever gets. Conviction is not certainty. It is being at peace with acting on the odds, and refusing to grade the decision by a short stretch of results. That is not stubbornness, it is arithmetic: with 3 to 4% tracking error, even a real 2% premium takes closer to two decades than five years to prove itself in the data. A bad stretch cannot tell you the strategy is broken, because the math does not let it.

Ben Felix put the stakes perfectly in a Bogleheads interview: you have to stay in your seat or you will miss the game when the action finally shows up. He also made a point I quote in my cheatsheet: building conviction costs real hours, and if you would not enjoy the reading anyway, the time cost can quietly eat the extra basis points you were chasing. When the Avantis CIO was asked who should hold a 100% small-cap value portfolio, the most extreme version of this bet, he laughed and said “that’s a very special person.” CAGE is a much milder commitment than that, but the principle scales: the tilt you can hold beats the tilt you abandon.

And if recent underperformance over a short sample already makes the decision hard, I mean this kindly: you do not have the conviction yet, and that is not a bad thing. It just means the answer for now is a plain market-cap weighted all-in-one like XEQT or VEQT, not CAGE.

The best case against all of this

The strongest argument against factor investing deserves a fair hearing, so here it is at full strength. In theory there are infinite factors you could define. All of them are built from backward-looking data, imperfect accounting inputs, and human judgment about which ones are real and whether the premium survives everyone knowing about it. You can usually find a paper by a couple of smart people to fit any narrative. A broad market-cap index appeals precisely because it makes fewer claims about the future. It does not need to be right about which characteristics win.

I agree with more of that than you might expect. Skepticism should apply to everything in investing, including the things I hold. I was drawn to XEQT partly by the Bessembinder research on how few individual stocks drive all the returns, and people have challenged those methodologies too. International diversification has its own doubters every time VFV outruns XEQT. At the end of the day you make choices with imperfect information and the evidence that makes the most sense to you.

Where I land: there are not hundreds of respectable factors, there are maybe four or five that command broad academic support across decades and markets. Factor investing is not claiming free money or reliable market-beating. It claims certain systematic exposures have higher expected returns because they carry additional risk, behavioural effects, or both. That is a much more modest claim than what most “beat the market” products sell, and I see the choice as closer to a long-term asset allocation decision than to traditional active management. But if the case against factors is the one that resonates with you, then market-cap weighting is the correct conclusion of your reasoning, and an all-in-one like XEQT is a great way to hold it.

Will CIBC shut these funds down?

A fair worry with any new ETF lineup: factor funds need scale, and delisted funds create taxable events. For what it is worth, CIBC launched a suite of eight rather than testing the waters with one or two, and Ebanks was direct on the podcast: they are committed and not watching a dollar threshold. Repetto went through the same doubts when Avantis launched in the US in 2019 with zero assets while competitors predicted their death; they now manage over US$125 billion. His term for low-quality products rushed to market is “gas station sushi,” and his pitch is that they do not sell it. None of that is a guarantee. It is a track record and a stated commitment, which is all you ever get.

So should you buy it?

If you are new to investing: no, or at least not yet. Start with my Investing for Beginners Cheatsheet and a plain all-in-one like XEQT. It remains my top answer when a close friend asks where to start, and nothing about CAGE changes that. The extra expected return from factor tilts is real but modest, and it is dwarfed by the damage of abandoning a strategy you did not fully believe in.

CAGE is for the person who has done the reading, understands they are accepting tracking error and possibly a decade of trailing their friends who hold XEQT, and wants that specific bet implemented cheaply in one ticker. Before CAGE existed, doing this required US-listed funds, currency conversion, and a multi-fund portfolio you rebalanced yourself. Now it is one purchase. That convenience is genuinely new for Canadians, and it is why this fund matters. It does not make the conviction requirement any smaller. It just removes every other excuse.

Nothing on this page is financial advice. It is one Canadian sharing his research and his reasoning. Read the fund’s official documents before investing, and if your situation is complicated, talk to a qualified professional.

Where to go deeper

• Rational Reminder episode 401 with Eduardo Repetto (Avantis CIO) and Caitlin Ebanks (CIBC): the definitive interview on how these funds work, from the people who built them.
• Ben Felix on the Bogleheads channel: the best discussion of who factor investing is actually for.
• The Avantis CIBC monthly field guide (published on CIBC’s site): current holdings, characteristics, and tilt data for every fund in the lineup. The numbers on this page came from the April 30, 2026 edition.
• My cheatsheet’s factor investing FAQ for the short version, and the how much risk should I take section for the framework behind all of this.