The opacity of all-in fees

What happens when alternative investments shift from niche products to the industry's go-to value proposition? In this episode, we're joined by financial planner and self-described "pathological nerd" Aravind Sithamparapillai for a rigorous exploration of private markets, product due diligence, advisor incentives, and the narratives driving the surging popularity of alts. Aravind has become known in advisor circles for asking the uncomfortable questions at conferences—the ones that expose gaps in explanations, shaky assumptions, and in some cases, outright contradictions. In this conversation, he shares the stories and analytical frameworks behind his deep dives into mortgage funds, private credit, private real estate, IRR-based marketing, vintage stacking, stale pricing, operational risk, and why even large professional allocators get burned. We explore how advisors are selling alts, how funds are pitching them, what due diligence actually requires, how expected returns can be decomposed, and why illiquidity and "low correlation" benefits rarely play out in practice. Aravind also explains how some funds maintain stable NAVs through "extend and pretend," how gating works, why audited financials aren't a safety blanket, and why even top-tier firms miss red flags.

Key Points From This Episode:

(0:00:38) Aravind's introduction and reputation for deep, "pathological" research

(0:02:23) Why alts have become embedded in Toronto's planning culture

(0:03:38) Client pressure, advisor FOMO, and the belief that 60/40 is "broken"

(0:05:31) Aravind's personal path into indexing, factors, and Dimensional

(0:10:46) Why he started digging into alts: curiosity, client conversations, and advisor narratives

(0:13:47) The "conference meme": why he asks questions others avoid

(16:58) The role of intellectual honesty vs. industry narratives

(20:19) The pivotal 2023 mortgage fund story: duration, turnover, and a major contradiction

(22:51) "Extend and pretend": how stable NAVs can be manufactured

(28:59) What "gating" actually means and why it matters

(31:48) Marketing tactics: cherry-picked start dates and chart crimes

(32:47) IRR manipulation, vintage stacking, and anchoring bias

(36:35) Why comparing gross private credit returns to net equity returns is misleading

(39:18) The problem with "low correlation" as a selling point

(41:00) Why rebalancing with illiquid assets often fails in practice

(44:58) How Aravind builds expected return estimates for alts

(47:07) Private real estate: why expected returns often land near public market levels

(48:48) A case study: apparent outperformance disappears once you match the right benchmark

(51:43) The idiosyncratic risk of overweighting single-sector, single-region REITs

(55:12) Why most advisors don't truly understand the all-in fees

(58:00) What real due diligence should include (and why it's so hard)

(1:00:35) Should advisors trust third-party due diligence providers?

(1:02:58) How much comfort should investors take from audited financials?

(1:05:02) Why valuation levels (1–3) matter and why most private funds use Level 3 inputs

(1:06:00) The overall conclusion: markets work, but alts require extraordinary scrutiny

Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p

Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/

Rational Reminder on YouTube — https://www.youtube.com/channel/ Benjamin Felix — https://pwlcapital.com/our-team/

Benjamin on X — https://x.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Cameron Passmore — https://pwlcapital.com/our-team/

Cameron on X — https://x.com/CameronPassmore

Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/

Ben Wilson on LinkedIn — https://www.linkedin.com/in/ben-wilson/

Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)