ETF Comparison

XEQT vs CAGE: index vs factor-tilted, which should you buy?

These aren't competitors in the same category. Here's how to decide which one matches your investing philosophy.

XEQT and CAGE solve different problems. XEQT delivers the global market at the lowest possible cost: every stock, weighted by how large it is. CAGE bets that small-cap, value, and high-profitability stocks will outperform the broad market over decades, based on factor research from Fama, French, and others. Choosing between them is a philosophical question first and a numbers question second. If you haven't decided whether you believe in factor investing, the answer is XEQT, not because it's better, but because it's the right starting point when you're uncertain.

Compare all three

XEQT vs VEQT vs CAGE

Add VEQT to see how Vanguard's all-in-one stacks up against XEQT and CAGE in one table, with an interactive cost-vs-premium chart.

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Side-by-side overview

	XEQT	CAGE
MER	0.20%	~0.32% (est.)
Holdings	~9,800	~5,200
Equity / Bond	100% equity	100% equity
Strategy	Market-cap index	Factor-tilted
Distribution	Quarterly	Quarterly
AUM	~$8B CAD	~$270M CAD
Inception	Aug 2019	Feb 2023
Exchange	TSX	TSX

Full specifications

XEQT: ETF Specifications

MER: 0.20%
Holdings: ~9,800
Equity / Bond: 100% equity
Distribution: Quarterly
Inception: Aug 7, 2019
AUM: ~$8B CAD
Exchange: TSX
Currency: CAD

CAGE: ETF Specifications

MER: ~0.32% (est.)
Holdings: ~5,200
Equity / Bond: 100% equity
Distribution: Quarterly
Inception: Feb 2023
AUM: ~$270M CAD
Exchange: TSX
Currency: CAD

Key differences

Investment philosophy

XEQT is a pure passive market-cap index. It owns every stock in the global market proportional to its size: more of Apple, less of a small Canadian mining company. No one is making judgments about which stocks are better; the market decides the weights. The academic case for this approach is the Efficient Market Hypothesis: if markets are efficient, stock picking (including tilting toward certain factors) shouldn't persistently beat the index.

CAGE takes the opposite view. It applies Avantis' factor methodology to tilt toward small-cap, value, and high-profitability stocks, the characteristics that Fama, French, and subsequent researchers found associated with higher long-term returns. The academic case for factor investing is strong in historical data, but factor premia can underperform for years or decades. Neither position is universally accepted among economists.

MER: 0.20% vs 0.32%

XEQT costs 0.20% per year. CAGE costs 0.32%. The 12 basis point difference is the cost of Avantis' factor methodology, not inefficiency or padding. At $250,000, the gap is $300 per year. At $500,000, it's $600 per year. If factor premia materialize, the expected return premium should offset this cost over the long run. If they don't, you're paying for underperformance.

Holdings methodology

XEQT holds approximately 9,800 stocks, weighted by market capitalization. The biggest companies (Apple, Microsoft, Amazon) represent the largest positions. CAGE holds approximately 5,200 stocks, selected and weighted by Avantis' factor screens. Smaller, cheaper, more profitable companies are overweighted relative to their market cap. This is a fundamentally different portfolio construction approach, not just a different stock-picker.

Track record

XEQT launched in August 2019 and has a nearly 6-year live track record. CAGE launched in February 2023, a short window that includes a period when value stocks performed relatively well. Neither ETF has enough live history to draw statistically meaningful conclusions about factor premia. Avantis' credibility rests partly on its founders' decades of work at Dimensional Fund Advisors, where similar factor strategies have longer histories, but that's not the same as CAGE's own track record.

Behavioural risk: the most important difference

The biggest risk of buying CAGE isn't that factor investing is wrong: it's that investors who buy CAGE without conviction will sell at exactly the wrong time. During growth-led markets (like the 2010s), CAGE will trail XEQT, potentially for years. An investor who doesn't have genuine belief in the factor thesis will feel increasing pressure to switch to the winning strategy, which means selling low and buying high relative to their original intent. Factor investing requires the discipline to hold through underperformance. Without that discipline, even a correct factor thesis generates below-average personal returns.

How to decide

Pick XEQT if:

→ You want pure passive exposure at the lowest cost
→ You don't have strong views on factor investing yet
→ You might switch strategies if you see sustained underperformance

Pick CAGE if:

→ You've read the factor research and find it convincing
→ You have a 20+ year horizon and won't sell during underperformance
→ You accept the higher MER as the cost of the methodology

The convenience trade-off

The table below shows the convenience cost of just-buying XEQT vs splitting it into its underlying components. This illustrates the general trade-off. The CAGE split cost is shown separately in the CAGE guide.

The convenience cost: XEQT vs splitting

Assumes 50% RRSP allocation. See the calculator for your own numbers.

Portfolio	Annual cost	20-year cost (compounded)
$250K	$401/yr	$14,749
$500K	$802/yr	$29,497
$1M	$1,604/yr	$58,995

See your portfolio's cost → ETF Split Calculator

Read the standalone case

Just buy XEQT?The case for XEQT: pros, cons, who it's for, and what it costs in convenience.Read the XEQT guide →Just buy CAGE?The case for CAGE: including the philosophical framing you need before buying a factor ETF.Read the CAGE guide →

Frequently asked questions

What is factor investing in plain language?+

Factor investing deliberately tilts a portfolio toward stocks with specific characteristics that academic research associates with higher long-term returns. The most studied factors are value (cheap stocks outperform expensive ones over time), size (small companies outperform large ones over time), and profitability (more profitable companies outperform less profitable ones). XEQT weights stocks by market capitalization, owning more of the biggest companies. CAGE instead screens and weights toward companies with stronger factor characteristics, regardless of market cap.

Will CAGE outperform XEQT?+

No one can say with certainty. Factor premia are documented in historical data across many markets and long time periods, but they are not guaranteed to persist. Value stocks significantly underperformed growth stocks for most of the 2010s in the US. Over very long time horizons (20 to 30 years or more), the factor thesis expects a return premium above the market-cap index, but individual investors may not experience that full cycle, and the premium may not materialize at all.

Is the higher MER worth it?+

Only if factor premia materialize and you hold long enough to benefit. CAGE's 0.32% MER versus XEQT's 0.20% costs an additional $300 per year per $250,000 invested. That's real money paid up front. Whether expected factor premia offset this cost depends on whether the academic research translates to future returns, which is a genuine empirical question without a settled answer.

What's the academic basis for factor investing?+

Eugene Fama and Kenneth French published foundational research in 1992 identifying the value and size factors, later extended to include profitability. This research has been replicated across markets and time periods. Fama shared the Nobel Prize in Economics in 2013 partly for this work. Avantis, which manages CAGE, was founded by former Dimensional Fund Advisors executives who spent their careers applying this research. The academic basis is well-established; the forward-looking case is debated.

When would CAGE be a bad choice?+

CAGE is a poor choice if you don't have genuine conviction in factor investing. Without that conviction, you're likely to switch out during growth-led periods when CAGE underperforms the market, buying high and selling low relative to your strategy. CAGE is also less appropriate if you're early in your investing journey and still forming your investing philosophy. Start with XEQT or VEQT if you're unsure: you can always revisit factor investing later with more context.

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