CACE vs XIC: factor-tilted Canadian equity vs the plain index

Short answer: XIC is the cheap, cap-weighted Canadian index, around 0.06% MER, holding the broad TSX in proportion to company size. CACE is the Avantis CIBC Canadian Equity ETF at a 0.19% management fee, holding a similar universe but tilted toward value, smaller, and profitable companies. The choice is whether you want the plain market at the lowest possible cost, or you’re willing to pay about 13 basis points more for a deliberate factor tilt and accept stretches where it trails the index.

For most Canadians building a portfolio, XIC has been the default Canadian-equity holding for over a decade. It’s cheap, it’s broad, and it does exactly what it says: owns the Canadian market by size. So when CACE listed in February 2026 as a factor-tilted alternative, the natural question was whether it’s worth swapping the thing that already works.

This walks through what actually separates the two, where the difference shows up, and who each one suits. This is not financial advice. I’m sharing what I’ve learned from my own research, and your situation might differ. MERs and fund details change, so always check the current disclosures before deciding.

What each one is

XIC is the iShares Core S&P/TSX Capped Composite Index ETF, run by BlackRock. It tracks the S&P/TSX Capped Composite, holds roughly 229 Canadian companies, and weights them by market cap with a cap on any single name. It’s pure, broad, cap-weighted Canadian beta at one of the lowest fees available.

CACE is the Avantis CIBC Canadian Equity ETF, listed on the TSX in February 2026. CIBC manages the wrapper, Avantis Investors runs the strategy. It owns a similar Canadian universe but applies the Avantis methodology: it tilts toward companies that look cheap on fundamentals, are smaller than the megacaps, and are reliably profitable, rather than weighting purely by size.

Both trade on the TSX in Canadian dollars. Both are single-country Canadian-equity building blocks, not complete portfolios. The difference is entirely in how they decide what to own and how much.

What “factor tilt” actually changes

This is the part that matters. Without it, the comparison is just a fee difference.

XIC owns the Canadian market in proportion to size. That means the big five banks, the large energy names, and a handful of other megacaps dominate the fund. It’s the market, faithfully reproduced. The Canadian market happens to be concentrated, so XIC is concentrated too: financials and energy alone make up a large share of the index.

CACE owns a similar universe but deliberately weights it differently:

• Value. Cheaper companies on fundamentals (book value, earnings, cash flow) get more weight than cap-weighting would give them.
• Size. Smaller companies get more weight than their market cap alone implies. Not small-cap only, just less concentration in the megacaps.
• Profitability. Reliably profitable companies are favoured; chronically unprofitable ones are reduced or filtered out.

The academic foundation goes back to Eugene Fama and Kenneth French, with Robert Novy-Marx adding the profitability piece in 2013. Decades of research suggest these tilts have delivered higher returns than the broad market over very long horizons. The honest framing is that “very long” can mean a long time, and there are no guarantees.

CACE vs XIC side by side

The cost line is real but small. XIC’s roughly 0.06% MER against CACE’s 0.19% management fee is about a 13 basis point gap, or roughly $130 a year on a $100,000 position. That’s the price of the tilt. Whether it’s worth paying depends entirely on whether you believe the tilt earns it back over your holding period.

The Canadian wrinkle

There’s a detail specific to Canada that’s worth understanding before you decide.

The Canadian market is small and concentrated. Financials and energy make up roughly half of a cap-weighted Canadian index, and a handful of names carry enormous weight. In a market that lopsided, the most useful thing a factor tilt does isn’t chasing a large size premium, it’s reducing how much of your Canadian sleeve rides on five banks and a few energy giants.

So the practical effect of CACE versus XIC in Canada is less about “factor returns” in the textbook sense and more about concentration. CACE spreads weight across more of the profitable, reasonably valued companies further down the size curve. For someone who’s uneasy about how bank-heavy a plain Canadian index is, that’s a feature. For someone who’s fine owning the market as it is, it’s a non-event worth 13 basis points less.

What to consider before switching

A few things worth thinking about, in rough order of how often they matter.

1. The fee gap is the easy part. 13 basis points is small in dollar terms, but it’s a certain cost against an uncertain benefit. You pay it every year regardless of whether the tilt works. Be honest with yourself about whether you actually believe in the factor thesis or just like the idea of it.

2. Tracking error is the whole point, not a flaw. If you hold CACE instead of XIC, you’re signing up for years where it trails the plain index, possibly by a lot. That’s the strategy doing its job. The risk isn’t the underperformance, it’s panic-switching back to XIC at the bottom and locking in the gap.

3. The size premium is thinner in Canada. The Canadian market doesn’t have the deep small-cap universe the U.S. does. The value and profitability tilts still apply, but don’t expect Canadian factor returns to look like the U.S. backtests you’ve seen on podcasts.

4. CACE is new. XIC has decades of trading history, deep liquidity, and a long distribution record. CACE listed in February 2026. None of that is a problem on its own, but the wrapper is unproven through full distribution cycles and real drawdowns.

5. You don’t have to choose all-or-nothing. Some people hold XIC as the core and add a smaller CACE position as a deliberate tilt, rather than swapping wholesale. If you’re working through this kind of decision across any new ETF, the how to pick ETFs in Canada guide walks through the broader checklist.

Who each one is for

This is observation, not recommendation.

XIC is for the investor who wants the Canadian market at the lowest defensible cost and doesn’t want to think about it again. It’s the default for good reason: cheap, broad, proven. If you can’t clearly articulate why you’d pay more for a tilt, XIC is almost certainly the right Canadian sleeve for you.

CACE is for the investor who has a real, articulated view that value, size, and profitability are worth paying a bit more for, who is bothered by how concentrated a cap-weighted Canadian index is, and who can hold through years of trailing XIC without second-guessing. “Real view” meaning you can explain the thesis, not “I heard about Avantis on Rational Reminder last month.”

For everyone else, XIC is doing exactly what it did yesterday. A new fund getting attention is not a signal that your current Canadian holding is broken.

Frequently asked questions

Is CACE better than XIC?

Neither is better in the abstract. XIC is cheaper (around 0.06% MER versus CACE’s 0.19% management fee) and gives you the plain Canadian market by size. CACE costs more and tilts toward value, smaller, and profitable companies, a bet that can outperform or underperform the index over long stretches. The right one depends on whether you believe the factor tilt is worth the extra cost and the tracking error.

What’s the difference between CACE and XIC?

XIC is cap-weighted: it owns Canadian companies in proportion to size, so banks and energy dominate. CACE is factor-tilted: it owns a similar universe but deliberately overweights cheaper, smaller, and more profitable companies and reduces concentration in the megacaps. XIC tracks the S&P/TSX Capped Composite index; CACE follows the Avantis rules-based methodology and tracks no published index.

Is CACE worth the higher fee over XIC?

CACE’s management fee is about 13 basis points above XIC’s MER, roughly $130 a year on a $100,000 position. Whether it’s worth it depends entirely on whether the factor tilt earns back that cost over your holding period, which is not guaranteed and can take a very long time. If you don’t have a strong view on factor investing, the cheaper plain index is the simpler choice.

Can I hold both CACE and XIC?

Yes, though it’s worth being clear about why. They cover the same Canadian-equity universe, so holding both mostly dilutes the factor tilt CACE is meant to provide. Some investors use XIC as the core and add a smaller CACE position as a deliberate tilt. Holding equal amounts of both is closer to owning a more expensive version of XIC.

Can I hold CACE or XIC in a TFSA or RRSP?

Yes. Both trade on the TSX in Canadian dollars and are eligible in any standard Canadian registered account (TFSA, RRSP, FHSA, RESP, RDSP, RRIF, LIRA) as well as non-registered accounts.

Bottom line

XIC is the cheap, broad, proven Canadian index, and for most people it’s the right Canadian sleeve precisely because it asks nothing of you. CACE is a deliberate bet: pay about 13 basis points more, accept stretches of trailing the index, and in exchange get a portfolio tilted toward value, smaller, and profitable companies with less concentration in the big banks. If you can’t explain why that tilt is worth it to you, XIC is the answer. If you can, CACE is a clean way to express the view in one Canadian ticker.