Just Buy CAGE

Should you just buy CAGE?

Avantis' Canadian-listed all-equity factor ETF, for investors who believe factor premia exist. This is a philosophy question before it's a numbers question.

Read this first

CAGE only makes sense as a “just buy” choice if you've already decided you want factor exposure. If you haven't, start with XEQT or VEQT instead. CAGE will likely underperform during growth-led periods, and if you don't have conviction in the factor thesis, you're more likely to switch out at the wrong time. Read about XEQT or VEQT first if you're still deciding.

TL;DR

If you want this, CAGE delivers

✓ Academic-grade factor implementation: small-cap, value, profitability tilts
✓ Canadian-domiciled: no T1135 foreign reporting hassle
✓ Low MER for a factor product (0.32%) from a credible research-driven manager

Worth knowing

· Higher MER than market-cap alternatives: costs ~$300/yr more per $250K vs XEQT
· Will trail pure index during growth-led markets: requires conviction to hold through
· Shorter live track record and smaller AUM than XEQT/VEQT

ETF specifications

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

Who CAGE is for

CAGE is for investors who believe factor premia exist and will persist. If you want plain cap-weighted market exposure, XEQT or VEQT are simpler choices.

CAGE is for investors who have read the factor research (specifically the Fama-French work on value and size, and subsequent research on profitability) and find it convincing enough to act on. Fama and French documented robust factor premia across markets and time periods going back decades. Avantis, led by former Dimensional Fund Advisors executives, built CAGE specifically to implement these tilts in a single Canadian-listed ETF.

It's important to be clear about what “factor investing” means in practice: factor premia are real in the historical data but not universally accepted as a reliable forward-looking signal. Value stocks underperformed growth stocks for most of the 2010s in the US. Anyone who bought into a factor-tilted strategy during that decade would have trailed a simple index fund for years. If you don't have the conviction to hold through a decade of underperformance, CAGE is not the right choice. XEQT or VEQT will serve you better.

CAGE makes the most sense for investors with a 20+ year investment horizon who have studied the factor thesis, accept the risk of extended underperformance versus the market-cap index, and want a single Canadian-listed ticker rather than building the factor portfolio themselves from individual ETFs.

The convenience trade-off

Just-buying CAGE is a valid option for committed factor investors. Here's what that convenience costs annually and over 20 years compared to the Avantis Factor Split strategy (AVUS + CACE + CADE + AVUV + AVDV + CAEM) with USD components held in an RRSP.

The convenience cost: CAGE vs splitting

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

Portfolio	Annual cost	20-year cost (compounded)
$250K	$369/yr	$13,579
$500K	$738/yr	$27,158
$1M	$1,477/yr	$54,316

See your portfolio's cost → ETF Split Calculator

Annual cost combines MER drag and foreign withholding tax savings foregone. Assumes 50% RRSP / 50% TFSA split. 20-year figure compounds annual savings at 6% growth.

Common alternatives

XEQT vs CAGEIndex vs factor-tilted: a philosophy comparison first, a numbers comparison second.Full comparison →CAGE split strategiesIf you want factor exposure but prefer to optimize for FWT, see the CAGE Avantis Factor Split in the calculator.Open ETF Split Calculator →

Frequently asked questions

What is factor investing?+

Factor investing deliberately tilts a portfolio toward specific stock characteristics that academic research associates with higher long-term returns above the market. The most studied factors include 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). Eugene Fama and Kenneth French published foundational research on these factors starting in 1992. CAGE applies these tilts; XEQT and VEQT do not.

Why is Avantis credible?+

Avantis Investors was founded by former Dimensional Fund Advisors (DFA) executives. DFA pioneered factor investing for institutional and retail investors starting in the 1980s and built decades of live performance data applying academic factor research. Avantis applies a similar but independently developed methodology. Their track record is shorter than Dimensional's, but their research pedigree is directly connected to the same academic tradition.

When would CAGE underperform XEQT?+

During extended growth-stock-led bull markets (like the 2010s in the US), value and small-cap tilts tend to underperform the broad market. CAGE is likely to trail XEQT during these periods, potentially for years at a time. Investors who buy CAGE without genuine conviction in the factor thesis are likely to sell during such periods of underperformance, effectively buying high and selling low relative to their strategy. That behavioural risk is the most important factor to consider.

Is CAGE worth the higher MER?+

Only if you believe factor premia will persist and you have the discipline to hold through extended underperformance. CAGE's MER is 0.32% versus XEQT's 0.20%, a 12 basis point difference that costs roughly $300 per year per $250,000 invested. If factor premia materialize over your investment horizon, the expected return premium should more than offset this cost. But factor premia are not guaranteed, and the premium has historically required decades to reliably emerge.

Can I split CAGE further?+

Yes. The ETF Split Calculator at FolioNorth supports CAGE split strategies, including the Avantis Factor Split (AVUS + CACE + CADE + AVUV + AVDV + CAEM). This replaces CAGE's CAD-listed US equity funds with their USD-listed equivalents for RRSP accounts, capturing the factor tilt while potentially reducing MER and foreign withholding tax drag. See the calculator for your numbers.

See exactly what splitting CAGE would save for your portfolio size and account mix.

Open the ETF Split Calculator →