How to Create Portfolios That Outperform the Past

In this episode, we are joined by the CIO of Avantis Investors, Eduardo Repetto, to have an in-depth conversation about his philosophy and approach to many of the central concepts that are important to our listeners. Eduardo weighs in on asset pricing factor investing, premiums, and also shares some of his perspectives on what makes Avantis different from its competitors. Eduardo's wealth of experience and technical know-how make this very practical exploration, complete with some inventive and demonstrative analogies. Despite the high-level concepts discussed, our guest's ability to communicate these in an accessible manner also helped maintain a level of approachability throughout. Toward the end of the episode, we get to hear a little about Eduardo's Ph.D. in aeronautics and some of the surprising overlaps he sees between his two fields of interest.

Key Points From This Episode:

• Eduardo's approach to communicating what Avantis can offer their clients. (0:02:57)
• Advantages of the ETF structure for managing portfolios. (0:05:07)
• Advice for investors for quantitatively assessing the expected return advantage of a factor-tilted portfolio. (0:10:26)
• Practical approaches for individual investors when assessing a factor tilt in portfolios. (0:13:54)
• Eduardo unpacks the idea of trust in relation to the premium. (0:20:45)
• When does a completely small-cap value portfolio make sense? (0:27:23)
• Avantis' method for targeting value and profitability. (0:31:03)
• The weighting of different metrics that Avantis uses when building portfolios. (0:34:43)
• Eduardo unpacks cash profitability versus operating profitability. (0:36:53)
• The approach at Avantis to sector weights. (0:39:56)
• Understanding adjusted book value when pricing a company. (0:43:53)
• Eduardo describes the premium for the Goodwill adjustment. (0:50:02)
• How Avantis views pursuing credit premium in fixed income investments. (0:51:32)
• Determining the size of factors tilts on particular products. (0:57:05)
• Reasons that there are no emerging market small cap value strategies. (0:59:48)
• Comparing the research behind inflation-focused equity strategy to a more general value profitability premium. (1:06:03)
• Avantis' strategy for staying on the cutting edge of the latest research. (1:10:34)
• Conversations between Avantis and American Century Investments about different investment philosophies. (1:18:22)
• Eduardo shares his opinion about Avantis' competitive advantage. (1:19:56)
• Where Avantis and Eduardo are aiming their energy in the near future, and the succession plan for the company. (1:23:11)
• Some surprising similarities between aeronautics and asset management. (1:27:21)
• Eduardo talks about his personal definition of success. (1:31:31)

Links From Today’s Episode:

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

Eduardo Repetto — https://www.avantisinvestors.com/content/avantis/en/about-us/our-team/eduardo-repetto.html

Avantis Investors — https://www.avantisinvestors.com/

Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/?hl=en

Rational Reminder on YouTube — https://www.youtube.com/channel/ Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/

Benjamin on Twitter — https://twitter.com/benjaminwfelix

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

Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/

Cameron on Twitter — https://twitter.com/CameronPassmore

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