r/JustBuyCAGE

For those investing in non-registered accounts, my understanding is that if you are holding an ETF that closes, any unrealized gain or loss that you have would become realized for tax purposes. This seems to create tax risks.

Many of us investing in ETFs plan to hold our ETFs (often a single ETF) through to retirement and beyond. This could be 20, 30, or 50 years. If capital gains are triggered all at once, that could be a small catastrophe, as you'd not only lose the tax deferral but also pay taxes at a higher marginal tax rate.

How do folks thing about this for CAGE? Is this a reason to prefer more established funds like XEQT and VEQT, or at least not to invest 100% into CAGE5?

Now that we can finally see the aggregate underlying holdings of CAGE and calculate factor tilts, estimate out of sample premia, etc., one has to wonder - what sort of return should a young professional expect if they are 100% CAGE for the next 30 years vs 100% XEQT?

I pulled CIBC's daily holdings file (which includes all five Avantis sleeves inside CAGE - US all-cap 39%, Canadian 29.5%, international 16.4%, EM 7.8%, global small cap value 7.2%), unpacked the full look-through, and matched it name-by-name against XEQT's ~8,300 look-through positions. About ~9,600 distinct companies. Matching CIBC's naming conventions to BlackRock's was about as fun as it sounds ("TORONTO DOMINION BANK NEW" vs "TORONTO DOMINION", Shopify hiding as "SHOPIFY SUBORDINATE", GE Aerospace vs General Electric, etc.), but the coverage came out comprehensive enough.

These funds are ~68% identical. 68 cents of every $1 sits in the exact same stock at the exact same weight. 93% of CAGE's weight is in companies XEQT also holds. The true active share is ~32%.

I haven't really seen this broken down quite like this yet:

Metric	CAGE	XEQT
Distinct companies	~5,700	~8,200
Top 10 weight	14.7%	18.6%
Mega-cap 9 (NVDA, AAPL, MSFT, GOOG+GOOGL, AMZN, META, TSLA, AVGO)	9.7%	14.3%
Effective # of holdings	276	182

Interestingly, CAGE actually holds fewer stocks but is meaningfully less concentrated, because it shrinks the giant positions by a decent margin. So, if your worry is "half my retirement is riding on 8 American companies," CAGE genuinely addresses that to some extent: it's 4.6% underweight the mega-caps.

The 50 largest individual bets only account for 6% of the 32% of active share. The other ~26% are thousands of tiny sub-0.1% tilts - small cap value doing its thing in the tail. At the sector level it's exactly what the Avantis pitch says: -6.1% Information Technology, -2.2% Health Care, +3.0% Energy, +2.1% Materials. Regionally: -4% US, +3.2% Canada, and notably more EM (7.8% vs XEQT's 4.7%).

So CAGE = XEQT + a 32%-sized side bet that is short NVIDIA/Apple/Broadcom and long Suncor, Teck, small value, and emerging markets. That is basically the fund's purpose.

The expected return math:

Sleeve-weighting the published factor loadings of the Avantis US equivalents, CAGE's incremental exposures are roughly: SmB +0.10-0.15, HmL +0.15-0.25, RmW ~+0.10, CMA ~+0.05-0.10. Multiply by your premium beliefs, subtract the ~0.15%/yr fee gap:

• Premia are dead (skeptic case): -0.15%/yr. You pay the fee and get nothing.
• Half of historical (post-publication haircut, probably the right point estimate): +0.50%/yr.
• Full historical Fama-French premia (not likely): +1.15%/yr.

A completely independent method (32% active share x 1-3% expected premium on the differentiated slice) gives ~the same answer. Central expectation: +0.4-0.5%/yr, bracketed by -0.15% and +1.2%.

So what does that mean for an actual human investing $2,000/month for 30 years?

At ~6.1% nominal (conservative 100% equities long term return), either fund gets you about $2.05M if the edge is nothing. Across scenarios:

• Skeptic case: CAGE ends ~3% behind (~$1.99M)
• Central case: ~4-8% ahead ($2.13-2.21M, an extra $80-160K)
• Full historical: ~17-26% ahead

So, the downside of being wrong is small (the fee gap is tiny), the upside if premia are real is a ~house down payment.

With ~2-2.5% tracking error, the standard error of the 30-year annualized gap is ~0.4%/yr. Which means even if the +0.4% edge is REAL, CAGE only finishes ahead of XEQT with ~80-86% probability. A true believer, right about everything, still faces roughly a 1-in-6 chance of having been paid nothing (or less) for 30 years of discipline. And along the way you will eat individual years where you trail XEQT by 2-4% because NVIDIA ripped again, your brother-in-law will send you his XEQT statement (you'll cry), and this sub will say their Hail Marys. If you can't pre-commit to holding through another 2010s-like value winter, 100% CAGE has negative expected value for you specifically, because buying the tilt and capitulating in year 12 is the only actually bad option on the table (and it isn't really THAT bad).

The same $2,000/month at 4.8% vs 7.5% market returns spans $1.6M to $2.7M. The market's own uncertainty is like ~5x bigger than this entire debate. Savings rate > fund choice is way more important.

Within the Fund profile sections of the component funds (e.g Avantis CIBC U.S. All-Cap Equity ETF), you can only see the top 10 holdings. In contrast, for iShares and Vanguard ETFs, you can download a full list of underlying holdings. How do you feel comfortable allocating a lot of money to an ETF whose holdings you’re unaware of?

I was with FEQT because I like factor investing and bitcoin but the small cap actively managed fund and the minimum volatility funds weren’t sitting well with me

So I finally pulled the trigger and now I am 97% CAGE and 3% FBTC

Hello! New to investing and enjoying the learning curve. I like the idea of factor tilt and evidenced based investing. I’m still unsure how I feel about Canadian home bias, but just starting to think about RRSP vs TFSA organization. I am wondering if CAGE is risky as an all in one ETF Given that there is a home bias of an economy that is not well diversified and then there is a tilt on top of that. Wondering if CAGX is a better way to go and get Canadian home bias somewhere else.

Love to hear thoughts!

Edit: specifically wondering people’s thoughts on using CAGX > CAGE and boosting home bias via alternative avenues. Not trying to open a discussion on the inherent risk of equities.

I’m interested in getting in some CAGE with less home bias. But is it risky going in when a fund is at its absolute baby birth?