Factor Investing in Canada: Avantis & Dimensional ETFs, Explained

A plain market-cap index fund like XEQT owns every stock in proportion to its size. Factor investing asks a different question: what if you deliberately overweighted the kinds of stocks that decades of research say should earn more — smaller companies, cheaper companies, and more profitable companies?

Ottawa advisor Ben Felix (PWL Capital, the Common Sense Investing YouTube channel and the Rational Reminder podcast) made this approach famous with Canadian investors. For years, doing it properly meant either hiring an advisor with access to Dimensional Fund Advisors, or buying US-listed ETFs like AVUV and converting your dollars. In 2026 that finally changed: CIBC brought Avantis Investors to the TSX. Here is every real option a Canadian has today, compared head-to-head.

The Five Factors, in Plain English

The framework is the Fama–French five-factor model. Eugene Fama and Kenneth French found that stock returns are largely explained by five sources of risk. Factor funds don't hold the market neutrally — they tilt toward four of them:

Two firms turn this research into funds. Dimensional Fund Advisors (founded 1981, built directly on Fama and French's work — both have been affiliated with the firm for decades) is the original. Avantis Investors launched in 2019 inside American Century Investments, run by former Dimensional leadership — its chief investment officer, Eduardo Repetto, was previously Dimensional's co-CEO and co-CIO. Same academic DNA, slightly different recipe: Avantis judges value and profitability together (a cheap stock only counts if it's also profitable), while Dimensional applies an integrated tilt across size, relative price and profitability with famously patient trading.

Neither firm runs an index. Their funds are classified as actively managed, but the "activity" is systematic and rules-based: hold thousands of stocks, overweight the smaller/cheaper/more profitable ones, trade patiently, keep costs low. Think of it as indexing with a deliberate lean.

The One-Ticket Showdown: Global Factor Funds

Most people don't want to assemble six funds. These are the single-ticker, all-equity, whole-world factor portfolios — and the first thing to notice is that where they're sold changes what "the world" means:

*CAGE's MER is from CIBC's interim report for the period ended June 30, 2026 (annualized; 0.61% before CIBC's fee absorptions). †CAGX launched August 27, 2026 — too new to have a published MER; expect roughly the 0.28% management fee plus taxes, the same pattern as its siblings. DFAW weights are actual holdings at June 30, 2026; AVGE/AVGV U.S. weights are prospectus targets.

The pattern: the US funds are built for Americans. AVGE and DFAW hold roughly 70%+ in the US and almost nothing in Canada — that's a US investor's home bias, not yours. CIBC sells both Canadian answers: CAGE deliberately holds 30% Canada (the same philosophy as VEQT), while CAGX holds Canada at its ~3% global market weight — the Canadian-listed equivalent of buying DFAW, without the currency conversion.

Canada's Own Factor Shelf #1: CIBC Avantis (New in 2026)

Announced November 26, 2025, CIBC Asset Management's alliance with Avantis Investors put real factor ETFs on the TSX for the first time. CIBC manages the funds; American Century (Avantis's parent) is the portfolio sub-advisor. Eleven funds in three waves — the building blocks launched February–March 2026, and balanced/growth/world funds followed in August 2026. Every equity fund uses the same legal recipe: securities "selected based on factors that consider profitability and value characteristics."

MERs are CIBC's interim figures for the period ended June 30, 2026 (annualized). They run only 2–6 basis points above the management fee, because CIBC absorbs most other operating expenses. †Funds too new for a published MER.

Two funds deserve a spotlight. CAUV is the Canadian-listed twin of the famous AVUV — US small-cap value with a profitability screen. And CASV is quietly unique: one TSX ticker holding small-cap value across the whole developed world, something that takes two funds (AVUV + AVDV) in US dollars.

Canada's Own Factor Shelf #2: Manulife's Dimensional ETFs

Long before CIBC Avantis existed, there was one way to buy Dimensional's research on the TSX: the Manulife Multifactor ETFs. Manulife manages them, Dimensional Fund Advisors Canada is the portfolio advisor, and each fund tracks a John Hancock Dimensional index built on Dimensional's factor research — overweighting smaller-cap, lower-priced, higher-profitability companies, with buy/hold ranges to keep turnover (and taxes) down. They've been trading since 2017.

MERs as at December 31, 2025. Hedged versions of the US and international funds also exist (MULC, MUMC, MUSC, MINT) at roughly 0.05% more. Manulife has quietly cut several of these fees since launch — MINT.B launched at 0.50%, MCSM at 0.60% — but the honest scoreboard still favours the newcomer: on every overlapping exposure, the CIBC Avantis fund costs roughly half the Manulife MER or less (US equity: 0.21% vs 0.36%. Emerging markets: 0.45% vs 0.74%). Manulife's remaining edges are its longer track record, its currency-hedged units, and MCSM's Canadian small/mid-cap niche, which CIBC doesn't cover. What Manulife has never offered is an all-in-one — a "Manulife Dimensional portfolio" has to be hand-assembled from the building blocks above.

And Dimensional Itself? Advisor-Only in Canada

There are no Dimensional-branded ETFs listed in Canada. Dimensional's own Canadian funds are mutual funds sold only through approved dealers — you cannot buy them in a self-directed brokerage account. Through a fee-based advisor, though, they're genuinely competitive since Dimensional Canada's June 2025 fee cuts:

Sound familiar? Dimensional sells the same two home-bias philosophies as CIBC: the older Global portfolio leans into a ~31% Canada weight; the newer World portfolio floats at market weights (~3% Canada). Class F management fees are 0.22–0.23% after the 2025 cuts — but Class F requires a fee-based advisor (whose own fee comes on top), and the minimum investment is $2,500. This is the route Ben Felix's firm actually uses for its clients.

The US Shelves: Building Your Own (USD)

If you're willing to hold US dollars, the American shelves are deeper and, fund for fund, a bit cheaper. The regional building blocks:

Expense ratios are net (after any fee waivers), from issuer documents as of 2026. *AVIV, AVDV and AVES ratios via fund-data aggregators; confirm on Avantis's site before buying.

Notice the small-cap value row: it's a shelf, not a single fund. AVUV covers only the US. A full small-cap-value tilt across all three regions means AVUV + AVDV + an emerging-markets value fund — which is exactly why CASV (one CAD ticker for the developed world) is such a useful shortcut, and why the emerging-markets corner still forces Canadians into US dollars.

The Ben Felix Blueprint

In his 2020 PWL Capital paper Five Factor Investing with ETFs, Felix published the model portfolio that launched a thousand Canadian spreadsheets: plain index funds for the core, Avantis funds bolted on for the small-cap-value tilt, and a deliberate 30% Canadian home bias:

• XIC (Canada) — 30%
• VUN (U.S.) — 30%
• XEF (developed) — 16%
• XEC (emerging) — 8%
• AVUV (U.S. small-cap value) — 10%
• AVDV (international small-cap value) — 6%

Weighted MER at the time: roughly 0.17%. Felix is candid that this is the do-it-yourself approximation — his firm's clients hold Dimensional funds through advisors, which he describes as the best implementation. The 2026 update writes itself: a Canadian can now build the same shape entirely in CAD (CACE + CAUS + CADE + CAEM, with CAUV and CASV supplying the small-cap-value kick), or simply buy CAGE and accept its built-in tilt.

The Canadian Catches on the US Funds

The US shelves are cheaper per fund, but for a Canadian they come with three frictions the sticker price hides:

1. Currency conversion. Every purchase starts with CAD → USD. Done badly (your broker's ~1.5% spread) it erases years of fee savings; done properly with Norbert's Gambit it costs a few dollars and some patience.

2. Withholding tax depends on the account. Dividends from US-listed ETFs face 15% US withholding (treaty rate). In an RRSP, US-listed funds are exempt under the treaty — but a Canadian-listed fund holding US stocks can't recover the tax withheld inside the fund, even in an RRSP. In a TFSA, the 15% on US-listed funds is simply gone — no treaty protection, no foreign tax credit. A US-listed global fund like AVGE or DFAW in a TFSA gets hit twice: foreign tax withheld into the fund, then US tax withheld on its way to you, neither recoverable.

3. Estate and paperwork edges. Large US holdings can drag Canadians toward US estate-tax filing territory, and every US holding is one more line at tax time in a non-registered account. None of this is a deal-breaker — Felix's own model uses US funds — but price it in before assuming USD is automatically better.

The Honest Risks (Read This Before Tilting)

Factor premiums are expected, not promised — Avantis's own fund pages say exactly that. Three things to sit with:

Premiums can sleep for decades. Value stocks have badly trailed growth since roughly 2007. Research on factor cycles suggests horizons of 15 years or more may be needed before entry timing stops mattering. If a ten-year drought would make you abandon the tilt at the bottom, the tilt will cost you money instead of making it.

The "factor zoo" is real. Hundreds of published factors fail stricter statistical tests for data-mining; in the best-known audit (Harvey, Liu & Zhu), the size premium itself did not clear the adjusted bar, while value did. This is why the serious implementations lean on value + profitability — the most robust findings — rather than chasing every published anomaly.

Tracking error is the price of admission. On the Rational Reminder, the CAGE discussion pegged the expected premium at roughly 1.5–2% per year against expected tracking error of roughly 3–4% per year versus a plain index fund. Your portfolio will look noticeably different from XEQT — sometimes better, sometimes worse, for years at a time. That difference is the entire bet.

The Final Verdict

Simplest factor portfolio in Canada: CAGE. One TSX ticker, 0.35% MER, a 30% home bias, and a real factor tilt — the first true "XEQT, but factor-tilted" this country has had. Prefer market weights? CAGX.

Cheapest DIY control: build from the CIBC building blocks (CACE/CAUS/CADE/CAEM + CAUV/CASV) for a blended cost near 0.25–0.30%, entirely in CAD.

Maximum tilt, minimum fund fees: the US shelves — AVUV/AVDV for small-cap value, AVGV for a value-only global fund, DFAW/DFAC for Dimensional's implementation — accepting FX conversion and the withholding-tax map above. Best placed in an RRSP.

Already have a fee-based advisor? Ask what Dimensional's own portfolios (0.29–0.31% MER) cost you all-in versus CAGE; the math is closer than it used to be.

And if none of this moves you? A plain asset-allocation ETF remains a perfectly rational portfolio. Factor investing is an evidence-based tilt, not a requirement — the investors it hurts are the ones who adopt it without believing it.

Data sources: CIBC Asset Management ETF Facts (Jan 27, 2026) and interim management reports of fund performance (period ended June 30, 2026); Manulife Investment Management fund profiles (MERs as at Dec 31, 2025); Dimensional Fund Advisors Canada fund facts (July 27, 2026) and US ETF fact sheets (2026); Avantis Investors fund pages and prospectus targets (2026); PWL Capital, "Five Factor Investing with ETFs" (2020). Fees and allocations change — confirm on the issuer's site before investing.