Episode 401: Eduardo Repetto & Caitlin Ebanks - Opening the Avantis CAGE

19:32Caitlin Ebanks:You have the fees because some of the products are live and the other ones have already filed the registrations. So they are slightly more expensive than the US products. There is a slightly higher cost here in Canada and in the US or slightly higher expensive. But I'd like the Canadian equity. And Kathleen, please correct me if I'm saying anything wrong. You will have the numbers more in your head than me. But if you think about the Canadian equity and the U.S. equity, I think at least 19 basis points in management fee. So the fees are very competitive. In the U.S., for example, the U.S. equity is 15.

20:04Caitlin Ebanks:So it's slightly more. They have a slightly higher cost, custody costs, and other costs. But I think that they're very competitive. We can give you a whole table of all the expense ratios across all of them. and we're always listening. Now, at the end of the day, as I say, we have to be sure that we provide something that is interesting to clients. And part of being interested is having the right level of fees.

20:25Eduardo Repetto:Caitlin, we know what the management fees are. We can see those in the prospectus. So I think like all the nerds that listen to this podcast already know what the management fees are. But something that I've seen come up as a concern is that we don't know what the management expense ratio is yet, which is going to include the op cost, the operational costs of the ETFs and the taxes and all that kind of stuff. Do we have a sense or do you have a sense of what the MERs are going to be for these funds? Yeah, so we expect the MERs to be just management fee times taxes, so times 1.13, the operating fees we are removing.

20:58Eduardo Repetto:The other thing I would say on this in terms of fees is we are trying to be incredibly competitive on fees and on pricing. There could be, if the ETF owns another ETF, There could be the MER of that third-party ETF coming through. If we own a CIBC ETF, we will take that out. So it won't show up there in the MER. So where possible, we'll try and use a CIBC ETF.

21:25Caitlin Ebanks:It's very important what Kathleen said. And we do the same in the United States. Some people give you management fee and then you have operating expenses. And the operating expenses are floating. So if the manager does a horrible job negotiating with the custodian, the manager doesn't suffer. the investor suffers. That in the US, we say, that's a no, no, no. If I do a good job negotiating with a custodian or a bad job negotiating with a custodian, that shouldn't really affect the life of the end investor. I hope I do a good job because I get paid the reasonable amount of money. But if I do a bad job, bother me.

21:58Caitlin Ebanks:I get paid less. And the end investor is basically not exposed to that. So I'm very glad that CIBC adopted the same philosophy.

22:06Eduardo Repetto:That's really good to hear because I know in the Rational Reminder community where these products have been discussed, there's been a lot of wait and see because we don't know what the MERs are going to be and they could be a lot higher. But the way that you guys described how you're approaching that, I think is going to be very reassuring to a lot of people. And just a reminder too that the MER won't be published until like after a year as well. Like it needs audited financial statements before being audited. Yeah, that's exactly it. So people are aware of that and they're like, well, let's wait and see what the MER ends up being after the first year.

22:35Eduardo Repetto:I think you guys have probably calmed a lot of people's nerves on that topic. And Eduardo, you said you've been around a long time. I've been around a long time too. And this whole fee discussion is such a refreshing time compared to like when I started where there was low fee awareness, but there used to be marketing fees. It would be five times what your total fee is, something like that. It's just an amazing time for an investor these days to get incredible, affordable exposure.

23:01Caitlin Ebanks:Look, it's impressive. I don't know what happened. I think a transparency for sure and people awareness and then advisors just going out there and being fiduciaries all that probably created a huge push to people be more transparent the moment that you're more transparent and you know the fees are in your face and you have to be more competitive and so that's great so eduardo i've

23:21Eduardo Repetto:got to ask you created this term gas station sushi it became a very famous term at least within our podcast community i've got to ask will these etfs be gas station sushi why will i sell gas station

23:33Caitlin Ebanks:sushi. You know, that term has become bigger than itself. I was reading in, I think, in the Wall Street Journal, some politician is speaking, and he used the term gas station sushi. I say, must be a Russian reminder person. I don't know who that person is. And it was not speaking about investment. It was speaking about something completely different. No, no, no, no gas station sushi. Don't worry, man. If we have gas station sushi, we don't have a business. One caveat. One advisor stopped me once and said, look, there is a gas station. I think it is in Pennsylvania. The sushi is good. I've never been there, but he claimed that, so I believe him.

24:10Caitlin Ebanks:So maybe a gas station, sushi from every station, but that one.

24:13Eduardo Repetto:You've been on tour in Canada, Eduardo. Have you had any gas station sushi?

24:17Caitlin Ebanks:No, man. The food in Canada is amazing. Look, I was in Montreal. Montreal is well known for the amazing cuisine. Toronto has also unbelievable cuisine. There are things in Toronto that you cannot find in LA and they're better. I was in Ottawa also having a great meal. In the past, I've been in Vancouver, Asian food and seafood in Vancouver and it's second to none. I was in Tofino one. I remember this little restaurant. Oh my God, it was amazing. I like to eat, let me be clear. But I was told other places that I haven't been. For example, I haven't been ever in Quebec City and I was told that Quebec City has a couple of places that are unbelievable.

24:52Caitlin Ebanks:Winnipeg and Edmonton, the steaks supposedly are very good but for me, steaks is hard bar because I'm from Argentina and I'm not, I like to stay. But no, no, Canada has very good for the money.

25:02Eduardo Repetto:So Eduardo, can you talk about the decision to launch ETFs as opposed to mutual funds in Canada?

25:08Caitlin Ebanks:The first thing that we always worry when we launch strategies is the strategy. Do we like the strategy? If it's a good strategy, we don't want them then saying, oh, that's cheap sushi, no? We want to be sure the strategy is right. Then we worry about the wrapper because inside the wrapper, you can put any kind of strategy. Any strategy can be in any wrapper. The first decision was to have the strategies that we thought were very good for Canadian Investor. So then we said, okay, we need to put it in its shape. And so we decided to launch at least first an ETF. And why is that? So ETF, I think about ETF and mutual funds as ETF, the vehicle of the future.

25:46Caitlin Ebanks:So I think a little bit of pay funds. Ben doesn't know what a pay fund is because he's too young, but you come around me. We have used plenty of those, putting coins. So I think a little bit about mutual funds as a pay fund. So if I have to go first on one thing, I would go to launch whatever I think is the best vehicle that is available there. The ETF provides a lot of protections for shareholders that I like. In the mutual fund, you get blindsided with cash flows. In the ETF, you never get blindsided by cash flows. I like that for fairness to the investors. Now, I'm not precluding having funds.

26:22Caitlin Ebanks:Look, we are a service, and some people really need funds instead of ETF. And so if the money is there, CIVC is more than willing to go and launch funds. You know that in the U.S. we have funds. We also have ETS and we have funds. Now we're launching CITs, that is a different vehicle for retirement. Funds in the United States are getting a lot of pressures for ETF on one side and CITs on the other. If you see the targeted funds, for example, have seen net outflows, CITs are tremendous in flow. That's telling you something. The market is deciding on that. But there are some people that have a need for funds.

26:59Caitlin Ebanks:In Canada, some people need the funds. They will tell us and we'll do the right thing. Kathleen, you may want to speak about this from the CBC point of view.

27:06Eduardo Repetto:We completely agree. So we're listening. If there's a demand for mutual funds, we're open to future launches as well. So this is just the beginning for us. We started with eight and we'll see what the market wants. I did grow up with pay phones for the record. My first cell phone, my parents bought me because I didn't have quarters to call them from the pay phone. And they finally decided that was okay. They got worried about me. So they bought me my first cell phone. I'm not that young. Okay. Okay. Ben, I do want to just jump in here as well on the fee conversation around mutual funds versus ETFs as well.

27:40Eduardo Repetto:and just assure everybody that when CIBC launches an ETF with an equivalent mutual fund, either like existing or the other way around, launches a fund version of an ETF, we price them both the same fee-based. So your fee-based mutual fund is going to be priced the same as your ETF. So it wouldn't be us launching mutual funds to make higher margins or anything. It would be priced the same. Yeah, that makes sense.

28:03Caitlin Ebanks:That's the same as we do in the US. Look at that. You see, that's what I'm telling you. You start speaking with CIBC and you say, oh man, these guys are thinking so similar to us. So very proud of that.

28:15Eduardo Repetto:Another question that I know came up a lot when the Raptor Amater community started discussing Avantis coming to Canada was who's actually going to manage the implementation of these Canadian listed products? Like what specifically is Avantis doing and what is CIBC doing?

28:29Caitlin Ebanks:We can get a little bit technical. The funds of the ETF are CIBC sponsored ETF, but the manager is Avantis. So the same portfolio managers that you know are the portfolio managers managing these strategies. Now, in the case of ETF, you have other functions, capital markets, for example. Well, in any fund, you have a bunch of other services like accounting, cost, all that is CIBC. Kathleen can speak about that. But the portfolio managers, the guys making decisions, they might be signing the trades. Even the guys trading are our guys.

29:02Eduardo Repetto:So from CIBC's perspective, we're responsible for the ETF itself in the sense that we're doing the reporting, the operational, the controls, continuous monitoring, making sure that we are staying within Canadian regulatory guidelines. Again, like the capital markets, reconciliation, like all of that. And here's another question I know the nerds want asked. Will the Canadian listed funds hold the securities directly or hold U.S. listed ETFs?

29:31Caitlin Ebanks:Whenever we do something, we're always thinking about what's the right thing for the investor. Because if you don't do the right thing, you're not going to grow them. No one will buy them. And so this ETF holds the securities directly with one exception. So we're buying securities in the US, in Canada. We're going to be buying securities in the merchant market when it's up and everything. With one exception. What's the exception? The fund of funds, cash. So the global equities. That's the fund of funds. Buy the other Canadian-based ETF. We're not buying US-based ETF here at all. So this is, when I mentioned before, these strategies are what you have seen in the U.S.

30:04Caitlin Ebanks:translated to Canada with some exceptions. We have exceptions because we need to separate Canada from EFI and whatnot. That's what I meant. It's like we're buying the same approach to buy the underlying security. Now, the fund of funds is different. It's CASH is different because it's an asset allocation fund. He buys the other ETFs.

30:20Eduardo Repetto:He buys the other ETFs, but because the other ETFs hold securities directly, the tax efficiency of buying the Canadian listed ETFs is great. It's less common now, but for many years, it was very common for emerging markets products, for example, to have a Canadian listed ETF that just held the US listed ETF. But as you guys know, that comes with some potentially meaningful tax inefficiency.

30:40Caitlin Ebanks:In other words, speaking about Canada, but look at usage. In usage, when we launch the usage, we have our emerging markets usage and buy securities. It goes out there and buy securities. And the one here will be the same. And in usage, we have a small value, it goes and buy securities. It's the same approach. We do a slightly different in Australia for some very good reasons for Australian investors. But I think that is more advantageous for an Australian investor structure that we have that buy insecurities. But for the rest of the markets, we always try to do whatever we think is the best for an investor.

31:13Eduardo Repetto:One of the products that I'm most excited about is the All Equity Asset Allocation ETF that you mentioned, the fund of funds. Can you talk about how aggressive the factor tilts will be in that fund relative to market cap weights?

31:23Caitlin Ebanks:Let me describe more or less what the asset allocation will be. So that final fund is coming next week. So it's 30 % in Canadian equities. And what is going to buy? CIC. And then the rest is basically market cap weights for the rest of the market. So the U.S. comes around 40%, EFI and emerging markets a little bit less. And then on top of that has an 8 % allocation to global small value. So the tilt is a tilt of our core-like strategies with an extra tilt to small value. That allows us to provide, in our opinion, significant value added. And the most interesting thing is how we're tilting. You can tilt in different ways.

32:08Caitlin Ebanks:If I tilt over things that don't have high respect returns, I increase in tracking error and increasing costs for no benefit. So if I tilt towards cheap sushi, yeah, you pay more, you have all these things, but you don't have the benefits. So you have the tracking error, you have the extra rates, but you don't have the benefits in expected returns. So the way we're tilting is really an efficient way in order to increase the expected returns. While we increase in tracking error, but very efficiently, not as much if you are tilting wrong.

32:37Eduardo Repetto:Yeah, we do have some questions about tracking error too, but just on the geographic allocations. So you mentioned that they're going to follow market cap weights. Is that market cap weights as of today?

32:46Caitlin Ebanks:outside Canada. Canada, 30%.

32:48Eduardo Repetto:Yeah, yeah. So excluding Canada, are those market cap weights as of today or is it going to consistently follow market cap weights over time?

32:55Caitlin Ebanks:Follow.

32:55Eduardo Repetto:Okay, that's good.

32:56Caitlin Ebanks:Unless you have a reason to have some kind of fixed light weight, nothing to tell you let's not float. And so the idea is floating. Even if you have a fixed weight to Canada, let's suppose that tomorrow Canada becomes the largest market in the world. 30 % may be underweight in Canada at that point. So you say, hey, we cannot have 30%. then we may have to go out 50. So even when you start a fixed weight, you have to keep an eye, but you can make more fixed. The rest, you're better off floating.

33:22Eduardo Repetto:When you look across the asset allocation ETFs that are available in Canada, some of them are floating market cap weights and some of them are fixed weights. I like what you guys are doing with the floating market cap weights. So I'm curious, Eduardo, how much outperformance and tracking error is it reasonable to expect from CAGE relative to a market cap weighted, but geographically matched ETF?

33:46Caitlin Ebanks:That's a great question. So it's good that you say geographically matched because if not, you have a lot of tracking error even for the same. So that's good. So with the value added would be 1.5%, 2%. And the tracking error is around 3%, 4%. So I'm giving you ranges. I can give you a specific number if you compute this, but ranges is better because this is not exact science. And then a market move and you have a little bit. At 150, and 200 basis points a year. You know that we have been managing these strategies, have been managing Canadian equities inside our US ETF, we have been managing EFI, we have been managing US, we have been managing more.

34:24Caitlin Ebanks:So we have a pretty good idea of how this would behave. We put it together for the last six and a half year track record in those. So we have a pretty good idea how that would behave.

34:35Eduardo Repetto:And these numbers are reasonable. Tilts in Canada in general have been pretty nice in recent history. Caitlin, Avantis in the US publishes a monthly ETF field guide that has the equity composition of each fund. And I know that our listeners find that really, really useful just to see what's going on under the hood with these ETFs. Will Avantis or CIBC be publishing something like that for these Canadian listed ETFs? So this question keeps coming up. So we definitely understand like the value of this piece and we are doing our very best to take all the pieces that Avantis has as collateral and Canadianize them, but also work within Canadian regulators as well.

35:15Eduardo Repetto:So there are some restrictions in terms of reporting, especially while we're in the first year. So those are just considerations that we are making, but the bones will be there for sure and more to come.

35:26Caitlin Ebanks:I had a meeting this morning with an advisor here in Toronto And that certainly was brought up. And he also wanted to have access to the podcast by Hal. I know you come around know Hal very well and you went too because you have him here. And so he said, how can I have access to the Hal podcast? Anyone can have access because it's in the Apple store. Certainly we do webinars with those guys, Hal, Mayor Stadman, all our other people. Look, we're here to help advisors. If we can help advisors, the end investor is better off. If advisors need help, that's okay. But if investors say, these guys can help me bring in this field guy or bring in behavioral finance experts or any other kind of experts, we are here to help.

36:10Caitlin Ebanks:And ACOBC is very focused on that.

36:12Eduardo Repetto:I like what you guys and Hal are doing with that podcast. I think Hal's been on this podcast three times. And I was actually on your podcast once, Eduardo, with Hal. I was the guest. I know.

36:22Caitlin Ebanks:And when Hal is a great mayor, mayor is amazing. So the advisor that we speak today is a big follower of mayor also. And so I said, look, I'm going to try to get a couple of books signed by mayor on a call and send them over because he knows all the books and say, OK, maybe I can do that.

36:38Eduardo Repetto:I think it's important as well for us to make the distinction that in Canada, there are some rules with like what we can brand for advisor use versus what we can brand for investor end use as well. So our goal is to be transparent and honest and open in our communication, but then also to make sure that we're meeting the investor where they are, who they are. So you may see similar pieces, but they're directed at different audiences from our perspective as well. Just for clarity, that's Hal Hirschfield that we've been talking about. And yeah, he's been a guest a number of times and is a good friend.

37:11Eduardo Repetto:As Mayor is also a guest, great interview. So Eduardo, CACE, the Canadian equity offering, is quite unique in the Canadian ETF market. Can you share how its average characteristics compare with the TSX index?

37:25Caitlin Ebanks:Basically, relative to the Canadian market, shifting weight from companies that have bad profitability and very high price relative to the adjusted book value. So if a company has high, low discount rates and made in the price of a company with low profitability and high relative price related to the adjusted book value, that company has lower respect returns. So we're going to underweight those companies in large caps and mid caps. In small caps, we may completely exclude those companies because it doesn't produce too much tracking error and they have horrible returns. So underweighting companies with lower respect returns.

37:57Caitlin Ebanks:So that is being shifted towards companies that have higher profitability, higher adjusted book divided by price or low price, despite the high profitability, what is an indication of higher expected returns. And that overweight is higher in mid - and small-cap companies where the premiums are higher because the valuations have more dispersion. And so similar to what you have in ABUS, ABBE, and ABN in the United States, the strategy is basically the same, just underweight companies with low expected returns because you identify with the low profitability and the very low book-to-price, and overweight companies with high profitability, high book to price, in particular in small and mid-caps where the premiums are much higher.

38:41Caitlin Ebanks:It's unique. The amount of shift you have is around 15 % underweight and 15 % overweight. The shift from reds to green, and most of your audience know what I mean, reds to green. Reds is a company that has low profitability, low book to market, and green is high profitability, high book to market. the shift is underweight, the rates are around 15 % and overweight, the company will higher expected return by 15%. So it's still tracking error sensitive. You know, you have to think about 2.5%, 3 % tracking error, but you have good value added. And that's what you have seen in all our core-like strategies in the US.

39:19Eduardo Repetto:Yeah, it's so good. And it really is a unique product in Canada. When we did our model portfolios back in 2019, when we used your US listed ETFs, we were trying to give our listeners, because people are listening to this podcast, hearing us talk about factor investing, but they had no way to implement it in their portfolio. So we did our models back in 2019 to give them an approximation of what we do, but we had no option for a factor tilted Canadian equity ETF. And still to this day, there's not really not a whole lot out there.

39:48Caitlin Ebanks:No, no, no.

39:49Eduardo Repetto:They say yes.

39:50Caitlin Ebanks:CAC is live. CAC is live.

39:53Eduardo Repetto:Right. Other than CAC. But yeah, you're really the only game in town for a high quality factor tilted Canadian equity ETFs. It's a very cool development for the Canadian market. How is turnover, noting that there are potentially differences in the structures in Canada and the US, how will turnover in the funds be managed to minimize capital gains distributions?

40:12Caitlin Ebanks:All our strategies have very low turn. We work on valuations at the end of the day. So you have low turnover and we're very cognizant of costs. So let's suppose that you say, I'm going to, And this is an example. If I'm going to pick up one basis point of excess expected return, I'm not going to spend five basis points in trading costs. That's just kind of done. So immediately when you are thinking in valuations and you're taking into account trading costs and all kind of implementation costs beyond trading, you say, okay, your turnover is going to be low. So the most aggressive strategy for turnover for us, probably small value, tend to have around 25 % turnover a year.

40:51Caitlin Ebanks:So it's a relatively low turnover. You think about that, 25 % turnover a year is around 10 basis points a day of turnover. It's 250 trading deals a year. So it's a very small number. If you look for the core-like strategies, that's even lower, way lower. So the amount of trading that you need to do to keep the strategies pure to their objectives is not too much. That's a huge advantage whenever you're dealing with taxes. Huge advances. And in particular, when you have cash flows, because when you have cash flows, you can fill the gaps with the cash flows in the growing strategy. You can say, well, this security I bought, move away.

41:31Caitlin Ebanks:Now I have another one to buy. You have a cash flow, you don't have the present magnitude. So considering cash flows, considering the low turnover, I think that we have something that is very, very interesting even for taxable investors. It's important to take all this into account. I'm not a big fan of strategies with high turnover. Someone may have an amazing strategy with high turnover. That's fine. I'm not going to, but we don't do those things.

41:56Eduardo Repetto:Caitlin, roughly how much AUM do you think one of these Canadian ETFs needs to remain open and viable in the long run? We're super committed to this suite. If we weren't, and we were just testing the waters, we would have launched one or two, but we launched a suite of eight, including that new products that aren't available anywhere else. So we don't have a dollar amount, but we are committed. We know that these are going to be successful. So we don't have a dollar amount because we're not worried about it, if that makes sense. Maybe a little overconfident, but we've seen the success. And Avantis does what they say.

42:31Eduardo Repetto:They've had consistent returns. The process works. And we're confident that Canadian investors are looking for a way to invest more tax efficiently in this suite.

42:41Caitlin Ebanks:This question is a very valid question because when we launched our ETF in the United States, and you guys may remember, it's end of September 2019, we were getting that question. We were getting that question every day. And on top of that, competitors were saying, oh, they have no money, they will shut down tomorrow. And so not only were we getting the question because of valid concerns as a fiduciary you have, also because they were being fed by information that was trying to create more uncertainty. And you see the story. You know, we have good products. We have good service. we have low fees, and we think that the people out there are clever.

43:17Caitlin Ebanks:If we get something that is good, at good price, at good fee, at good service, those guys out there that are clever, they will take advantage. And that's what we want them to do, to take advantage and use this as much as they can if that's good for them and we think that it is. So we're very confident.

43:33Eduardo Repetto:Eduardo, just thinking more generally about Avantis, you were last on in 2024. Have there been any enhancements to the Avantis approach to portfolio implementation since last time we talked?

43:44Caitlin Ebanks:Yeah, we're going to speak about a couple of things that we touched here and there. I always think about enhancements. Sometimes we speak with some people, and that's not you, by the way, that says they want you to make a change every quarter. It's common. Some kind of consultants want you to make a change every quarter. If you make a change every quarter, it means that the last quarter something was wrong. If things were right, why don't you change every quarter? And the beauty of what we have done is it was thought very well from day one. And so the bar to make changes is very, very high. It still is not perfect.

44:15Caitlin Ebanks:I'm never going to claim that we're perfect. Even if we make 100 more changes because we discover the new unpowder, it's not going to be perfect. Perfection is not achievable. You want to strive to get there. But the bar is high. So we have made some tweaks in our momentum filters. We have touched a couple of markets because of Accantion rules. We have a chance of our measure of profitability. But most of the things are similar. The tweaks of momentum, some have happened and some more will happen that are already planned. But the biggest, biggest thing that we know that needs work because perfection is not there is the measure of profitability.

44:53Caitlin Ebanks:Because you know that we're using last 12 months. We need this future. Who cares how much money the company is going to make in the future? And using the measures that we have, have information about the future and future returns. But if you tell me how to predict the future, that's why perfection is not achievable. We never do perfect, but maybe there are ways to have a better proxy for future profitability. And that's something that we're always looking. Maybe there is information that is available now. Maybe it's information that may not be available now, but may be available in the future.

45:23Caitlin Ebanks:And so we're always looking and trying. We have played with other things. Some things were already promising, and then you test them enough that they say, okay, it's not working. But we have a hope. We think that we're always testing new things, and we think there's a couple of things that may work. But look, I wouldn't be surprised if we say later it doesn't work. That's the horrible life of a researcher. A researcher is full of hope and full of frustration. And it's a horrible life for the researcher. He says, oh man, I'm excited. This is great. And then boom, someone just punches you in and says, oh, it doesn't work.

45:57Caitlin Ebanks:You have to have nerves of steel, you know, and perseverance like no other. So what's the most hopeful research that you're looking at implementing now? Well, in Primetime now, we have a couple of things on Momentum that we're doing, but the most hopeful research is trying to be able to have a better prediction of profitability in the future. Profitability growth, if you want to think about. So we are quite good at predicting the level, but the derivatives of the level, the variations of the level, is there anything that gives us hint or indication? And we have something that we tested a lot, but I don't think that it's producing the benefit that we should see.

46:34Caitlin Ebanks:So there is something that is not working, but that's the frustration life.

46:39Eduardo Repetto:I do have one more question about CAGE. So we talked about the geographic allocations. How are the factor tilts decided? The thought behind the question is, will the factor tilts change over time for any reason?

46:51Caitlin Ebanks:Okay. This is a portfolio that is more tilting than the core strategy. So you look at our ABDE in the US, ABM, and ABUS. Here is CAC, that is the Canadian equities, CAUS, the U.S. equity, CAB, the EFI, and CEN, the merchant markets. So it's those tilts plus an extra one towards global, the small value. And value defined as not cheap sushi, our way of doing it. And so WETIA has quite a lot of tilt. I'm not telling you that that's a perfect amount of tilt. There is no perfect. There is a restorative for investors or someone more, someone less for personal reasons or behavioral reasons or whatnot.

47:36Caitlin Ebanks:So we feel comfortable with that. It may come the case that, you know, there is a set of investors that want way less and way more. And so we have two set of clientele. And if that's the case, we may have to have more than one. And here we are. We're listening. Remember, I always say we're in the service business. And so if I provide a service and no one is interested, I don't have a service. So if there are one set of clientele and all the same, okay, I have a service. If there are two set of clientele and I want to service both, I may need two things. So we're listening. We're listening to what people want.

48:10Caitlin Ebanks:We know, for example, that we will have to have balanced strategies. We know that. Now the question is, what kind of balanced strategy? How much fixed income and equity? Because I cannot have 10 balanced strategies. It doesn't make any sense.

48:21Eduardo Repetto:So what do I need? And we'll see. I can tell you guys are both excited about this launch. I would love to hear from each of you. What are you most excited about? I am super excited about emerging markets, to be honest. I think that the alpha that it's driven in the US, the fact that it is the largest actively managed emerging market ETF in the world, and we're bringing a Canadian version that holds the underlying directly. Again, Ben, like you mentioned, there are quite a few EM ETFs in Canada that still wrap a US listed. Again, two layers of withholding tax there. I think that this is an incredibly differentiated strategy in an incredibly tricky market to navigate for investors.

49:03Caitlin Ebanks:I'm a little bit older than Kathleen, as you can notice. I have three kids and someone asked me, which one of your kids you like? I like all of them for different reasons. I really like them a lot. So you say, what strategy I love? I love all of them. If not, we are not going to have them. I think each strategy that we launch have a purpose, and all of them together help an advisor achieve an asset allocation. Like CAG, it's an asset allocation. All equities later will have balance, but it serves an asset allocation that, in our opinion, is much better than just a market cap weighting index that doesn't consider a expected return.

49:40Caitlin Ebanks:They higher the price, they higher the weight. We can provide something that is more meaningful for advisors and for the investors that is knowledgeable, can deal with tracking error and whatnot. So I'm very excited to be able to bring that to Canada. You mentioned before that I was telling you, we'd love to be in Canada, but I don't know if we are going to be able to do a traditional fee. If we're not able to do a traditional fee, we're not going to do it because doing a bad job is not a good idea for anyone. And so I'm very, very excited to be back in Canada. I have great experience in Canada.

50:10Caitlin Ebanks:One of the beautiest things of Canada is that people speak different languages, you know, French. And so I never feel like I'm the guy that has the accent. There are many people that have an accent, no matter what language you are. So I want more of the crowd. No, I really enjoy being in Canada. It's a pleasure interacting with Canadian advisors. And so I'm really, really excited to be back here with something that hopefully is of great use to all the investors.

50:37Eduardo Repetto:Ben and Cameron, I'd love to hear what you're most excited about too. Canadians have really embraced the asset allocation ETFs. And there's even subreddits. There's almost these like cult followings of specific tickers. There's a subreddit called Just Buy XEQT. I think there's another one called Just Buy VEQT, which are all equity tickers from Vanguard and BlackRock. I think CAGE is a really, really exciting addition to the Canadian market where when I'm talking about how PWL invests and how I think about investing, I can point people to a single ETF just like they could with a market cap weighted globally diversified equity asset allocation ETF.

51:14Eduardo Repetto:I'm really excited about that. I do think it's going to have a big impact on the Canadian market. I know the people that listen to our podcast are going to be super excited because historically, if they wanted to invest like we do, but doing it themselves, they had to do this kind of complicated thing, mashing up US listed and Canadian ETFs. They had to hold multiple ETFs. They had to do currency conversion themselves. So all that goes away with a product like CAGE. So that's by far what I'm most excited about. Yeah. And I look at the big arc of the industry. I think it's great that we're making such great progress on, as I said earlier, lower cost, very effective, efficient, targeted, intelligent tools that actually capture some of the research that's been going on, as we all know, for 60 plus years in this space of financial economics.

52:01Eduardo Repetto:So I think that's all great for the Canadian public. And to have it coming from a bank, I think that's also good progress. So that's what makes me excited about this evolution. And the evolution continues, right? I think Canada's historically been slower in this evolution and it's nice to see some change.

52:18Caitlin Ebanks:I love it. One thing for you, Ben on camera, next time that you have one of these events, I want to show up. You guys have been so great and your listening is so great, not only in the US, also in Europe and in Canada. I want to go. I want to have a beer with all of

52:31Eduardo Repetto:them. So let me know. We'll do it. We were going to do a bunch of meetups this year. Was the original plan, but we decided not to do any. I don't think we've just been so busy, but next time we do a meetup, we will absolutely invite you. It'll make a big splash. Lots of people will want to come to that.

52:46Caitlin Ebanks:I'm in. We can do one in LA. Everyone comes to LA, man. January of February in LA, man. What else?

52:52Eduardo Repetto:I like it. Awesome.

52:54Caitlin Ebanks:Thank you guys. Thank you very much.

52:55Eduardo Repetto:Great to see you both. Thank you very much. Yeah, thank you guys. Really appreciate you coming back on the podcast. Thanks. Thanks guys.

53:05Eduardo Repetto:Hey everyone, it's producer Matt. Thank you so much for tuning in to this week's episode. Before we sign off, here's the disclaimer you've been waiting for. Portfolio management and brokerage services in Canada are offered exclusively by PWL Capital, which is regulated by the Canadian Investment Regulatory Organization and is a member of the Canadian Investor Protection Fund. Investment advisory services in the United States of America are offered exclusively by One Digital Investment Advisors, LLC. One Digital and PWL Capital are affiliated entities, and they mostly get on really well with each other.

53:38Eduardo Repetto:However, each company has financial responsibility for only its own products and services. Nothing herein constitutes an offer or solicitation to buy or sell any security. Occasionally, we tell you not to buy crappy investments in the first place, but that's not the same thing as telling you to sell them. This communication is distributed for informational purposes only. The information contained herein has been derived from sources believed to be truthy, but not necessarily accurate. We really do try, but we can't make any guarantees. Even if nothing we say is fundamentally wrong, it might not be the whole story.

54:13Eduardo Repetto:Furthermore, nothing herein should be construed as investment, tax, or legal advice. Even though we call the podcast your weekly reality check on sensible investing and financial decision making, you shouldn't rely on us when making actual decisions, only hypothetical ones. Different types of investments and investment strategies have varying degrees of risk and are not suitable for all investors. You should consult with a professional advisor to see how the information contained herein may apply to your individual circumstances. It might not apply at all. Honestly, you can probably ignore most of it.

54:45Eduardo Repetto:All market indices discussed are unmanaged, do not incur management fees, and cannot be invested indirectly. Which is a shame, because it would be awesome if you could. All investing involves risk of loss, including loss of money, loss of sleep, loss of hair, and loss of reputation. Nothing herein should be construed as a guarantee of any specific outcome or profit. Past performance is not indicative of or a guarantee of future results. If it were, it would be much easier to be a Leafs fan. All statements and opinions presented herein are those of the individual hosts and or guests, and are current only as of this communication's original publication date.

55:26Eduardo Repetto:No one should be surprised if they have all since recanted. Neither One Digital nor PWL Capital has any obligation to provide revised statements and or opinions in the event of changed circumstances. See you next time.