Episode 364 – Martijn Cremers: Is the Conventional Wisdom on Active Management Wrong?
Release Date: 07/03/2025
Episode 371: Banks Sell Products, Not Advice
The Rational Reminder Podcast
In this episode, Ben Felix and Cameron Passmore take a critical look at the Canadian banking system’s mutual fund advice model. A newly released study by the Ontario Securities Commission (OSC) and the Canadian Investment Regulatory Organization (CIRO) confirms what many already suspected: Canadian bank branches aren't in the business of giving impartial advice—they're selling financial products. Ben breaks down the implications of this study, which surveyed nearly 3,000 bank-affiliated mutual fund representatives, uncovering troubling statistics about sales pressure, lack of credentials,...
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Episode 370: Dave Chilton (The Wealthy Barber): Timeless Financial Advice
The Rational Reminder Podcast
What if the most impactful financial advice isn’t about picking the right investment—but about understanding human behaviour, simplifying your life, and laughing along the way? In this episode of the Rational Reminder podcast, we’re joined by none other than David Chilton, author of the legendary personal finance book The Wealthy Barber. David shares insights from decades of experience helping Canadians improve their financial well-being through simplicity, frugality, and clarity. We dig into the enduring lessons of his 1989 classic, why the new edition took even longer to write, and...
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Episode 369: The Most Important Quotes in Investing
The Rational Reminder Podcast
In this episode of the Rational Reminder Podcast, Ben Felix and Dan Bortolotti celebrate the show’s 7th anniversary with a conversation centered around timeless investing wisdom. Drawing from a vibrant thread in the Rational Reminder community, they unpack dozens of quotes that distill decades of financial insight into actionable mantras. What begins as a curated list of one-liners quickly evolves into a masterclass on the behavioral and practical realities of long-term investing. From “pay yourself first” to “diversification is the only free lunch,” Ben and Dan explore how...
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Episode 368: Jim Rowley & Andy Maack - Implementing Index Funds at Vanguard
The Rational Reminder Podcast
What if index funds weren’t as “passive” as you think? In this episode of the Rational Reminder, we are joined by Jim Rowley, Global Head of Investment Implementation Research, and Andy Mack, Head of US Equity Portfolio Management at Vanguard. These two experts offer a rare, behind-the-scenes look into what it really takes to run some of the world’s largest index funds—and it’s far from “set it and forget it.” From real-time trading decisions to managing $7 trillion globally, Jim and Andy walk us through how Vanguard implements index strategies with a precision that rivals any...
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Episode 367: AMA #8 + Insurance Needs Analysis with Louai Bibi
The Rational Reminder Podcast
What if early RRSP withdrawals aren’t always the tax-smart move they’re made out to be? In this special AMA edition of the Rational Reminder podcast, Ben and Cameron are joined by PWL Financial Planner Louai Bibi for a wide-ranging discussion on RRSP decumulation strategies, insurance planning, and the practical complexities that real clients face when theory meets reality. Ben walks through a listener’s case study and shares insights from colleague Melissa on why early RRSP withdrawals (a.k.a. “meltdown” strategies) are not always beneficial—especially when viewed through a...
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Episode 366 - Avoiding Investment Scams
The Rational Reminder Podcast
What happens when your favourite financial educator’s identity is hijacked by scammers? In this episode, Ben and Cameron pull back the curtain on a disturbing but increasingly common reality: sophisticated scammers using Ben’s name, voice, and online content to steal from unsuspecting investors. Ben breaks down exactly how these scams work—everything from fake WhatsApp investment groups and cloned emails to AI-generated voice notes and “pig butchering” scams that promise guaranteed returns. You’ll hear about pump-and-dump operations, shady PDFs full of financial nonsense, and how...
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Episode 365 – Rob Carrick's Eight Lessons Learned in 27 Years of Covering Personal Finance
The Rational Reminder Podcast
In this episode, we welcome back Rob Carrick—one of Canada’s most trusted personal finance journalists—for his third appearance on the Rational Reminder podcast. Rob recently retired after an incredible 27-year career at The Globe and Mail, where he shaped how millions of Canadians think about investing, advice, and their money habits. Rob joins Ben, Cameron, and Dan to reflect on the biggest lessons from his decades-long career, the state of Canadian financial advice today, and why young Canadians face headwinds unlike any previous generation. From the shift from mutual funds to ETFs...
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Episode 364 – Martijn Cremers: Is the Conventional Wisdom on Active Management Wrong?
The Rational Reminder Podcast
In this episode, we’re joined by Martijn Cremers, Dean of the Mendoza College of Business at the University of Notre Dame and co-author of the groundbreaking 2009 paper that introduced the concept of Active Share. Martijn brings fresh nuance to the long-standing debate over active versus passive management, challenging decades of conventional wisdom built on the foundational 1997 Carhart paper. With his comprehensive research, Martijn argues that dismissing active management may be overly simplistic—especially in less efficient markets like bonds, small-cap equities, or emerging markets....
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Episode 363 - The (Underappreciated) Risk of Individual Stocks
The Rational Reminder Podcast
What if holding just a few “winning” stocks is riskier than it seems? In this episode, Ben and Cameron explore the hidden dangers of concentrated portfolios and unpack the data that makes a strong case for diversification. Drawing from research by Hendrik Bessembinder, J.P. Morgan, and others, Ben lays out the harsh reality behind individual stock returns: the odds are stacked against long-term success. From skewed return distributions and catastrophic losses to behavioral traps like the endowment effect and familiarity bias, this conversation breaks down why most stock pickers lose—and...
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Episode 362 – AMA #7
The Rational Reminder Podcast
What if the hardest part of investing isn’t building a portfolio—but sticking to it? In this AMA edition of the Rational Reminder podcast, Ben Felix and Dan Bortolotti tackle listener questions ranging from sustainable retirement withdrawals to the dangers of structured products, with plenty of philosophical insights on risk, behavior, and financial planning. The episode opens with a deep dive into the 4% rule, exploring how time horizon, asset allocation, and global data can shift the definition of “safe.” They also explore the behavioral challenges of the “boring...
info_outlineIn this episode, we’re joined by Martijn Cremers, Dean of the Mendoza College of Business at the University of Notre Dame and co-author of the groundbreaking 2009 paper that introduced the concept of Active Share. Martijn brings fresh nuance to the long-standing debate over active versus passive management, challenging decades of conventional wisdom built on the foundational 1997 Carhart paper. With his comprehensive research, Martijn argues that dismissing active management may be overly simplistic—especially in less efficient markets like bonds, small-cap equities, or emerging markets. Together, we explore how empirical support for passive superiority has softened in recent decades, the overlooked structural flaws in performance benchmarks, and how closet indexing quietly undermines the active management space. Martijn outlines the three pillars of active success—skill, conviction, and opportunity—and makes a compelling case for patient, high active share strategies that persist over time.
Key Points From This Episode:
(0:01:24) Introduction to Martijn Cremers and his influential work on Active Share
(0:04:15) Breaking down the “conventional wisdom” on active management post-Carhart
(0:07:19) Why passive benchmarks like Fama-French factors may create misleading comparisons
(0:09:38) Reviewing persistence of outperformance in high active share funds
(0:12:40) Evaluating Sharpe’s arithmetic and how market evolution challenges zero-sum assumptions
(0:15:58) The long-term decline of active funds and the influence of concentrated indexes
(0:18:30) The paradox of skill, ETFs with high active share, and the survival of active managers
(0:21:18) Revisiting active management in underexplored asset classes: bonds, small caps, emerging markets
(0:23:20) The definition and calculation of Active Share
(0:25:01) Active Share vs. Tracking Error: complementary tools, not substitutes
(0:27:22) What level of active share signals closet indexing? Why 60–70% is the key threshold
(0:30:49) Performance persistence and why combining high Active Share with patience matters
(0:34:05) The concept of the “active fee” and how much you’re really paying for stock selection
(0:36:51) Why fund size and team changes can erode active share
(0:38:17) Three pillars of successful active management: skill, conviction, and opportunity
(0:40:13) The challenge of being a patient manager in an impatient world
(0:42:25) How Active Share was received by academics and practitioners
(0:44:18) Responding to critics: the 2016 FAJ paper “Deactivating Active Share”
(0:46:56) Why dispersion in high active share funds can enhance portfolio diversification
(0:49:21) Who should pursue high active share strategies—and who shouldn’t
(0:51:40) Active share in fixed income: Why passive bond funds are often far from passive
(0:53:51) Key structural differences between equity and bond indexing
(0:55:25) Why bond index funds have high active share and hidden tracking error
(0:57:36) Why positive skewness (a key argument for equity indexing) doesn’t apply to bonds
(0:59:22) Performance of active bond funds: modest but consistent outperformance
(1:00:02) Why active bond funds remain popular: liquidity, trading frictions, and benchmark limitations
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 Website — https://rationalreminder.ca/
Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on X — https://x.com/RationalRemind
Rational Reminder on TikTok — www.tiktok.com/@rationalreminder
Rational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin Felix — https://pwlcapital.com/our-team/
Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Dan Bortolotti — https://pwlcapital.com/our-team/
Dan Bortolotti on LinkedIn — https://ca.linkedin.com/in/dan-bortolotti-8a482310
Cameron Passmore — https://pwlcapital.com/our-team/
Cameron on X — https://x.com/CameronPassmore
Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/
Episode 316: Andrew Chen - https://rationalreminder.ca/podcast/316
Episode 212: Ralph S.J. Koijen - https://rationalreminder.ca/podcast/212
Episode 220: Jonathan Berk & Jules Van Binsbergen - https://rationalreminder.ca/podcast/220
Episode 346: Hendrick Bessembinder - https://rationalreminder.ca/podcast/346
Papers From Today’s Episode:
https://zbib.org/2224f8de634743fb8f33a68009b8fcff