Episode 394: Equal Weight vs. Market Cap Weight Index Funds
Release Date: 01/29/2026
Episode 403: Patrick Adams - When Stock Crashes Matter for Long-Term Investors
The Rational Reminder Podcast
What if your biggest investment risk isn’t the stock market—but your own income? In this episode, we are joined by Patrick Adams, a PhD candidate at MIT, for a fascinating deep dive into how income risk, spending commitments, and liquidity constraints reshape what “optimal” investing actually looks like. Drawing on large-scale administrative tax data, Patrick challenges the conventional wisdom that young investors should be heavily—or even fully—invested in equities. We explore why stocks appear safe over long horizons but become risky when real-world constraints force investors to...
info_outline
Episode 402: The Problem with Private Markets
The Rational Reminder Podcast
In this episode, we unpack the growing tension in private markets—private equity, private credit, and private real estate—and examine whether their long-standing appeal holds up under scrutiny. With increasing pressure to bring these investments to retail investors, the discussion explores how illiquidity, valuation opacity, and complex fee structures may be masking risks rather than reducing them. We break down how private assets are marketed, why their “smooth” returns may be misleading, and what recent events—like gated funds and forced asset sales—reveal about their true risk...
info_outline
Episode 401: Eduardo Repetto & Caitlin Ebanks - Opening the Avantis CAGE
The Rational Reminder Podcast
What if factor investing in Canada became as simple—and affordable—as buying a single ETF? In this episode, we are joined by Eduardo Repetto, CIO of Avantis Investors, and Caitlin Ebanks, Director of ETF Strategy at CIBC, to unpack the long-awaited launch of Avantis ETFs in Canada. This conversation explores how a partnership built on client-first principles and fee discipline is bringing sophisticated, evidence-based investing strategies to Canadian investors in a dramatically more accessible way. We dive into the structure and philosophy behind the new ETF lineup, including how Avantis...
info_outline
Episode 400: The Evolution of Index Fund Investing
The Rational Reminder Podcast
In this special 400th episode, the Rational Reminder hosts reflect on 50 years of index investing and the profound impact it has had on financial markets, investor behavior, and the cost of investing. The episode features a panel moderated by Ben Felix at the New York Stock Exchange—hosted by Vanguard and S&P Dow Jones Indices—bringing together leading voices in the indexing world to explore how passive investing evolved and what it means for the future of capital markets. Ben is joined on the panel by Tim Edwards (S&P Dow Jones Indices), Jim Rowley (Vanguard), and Shelly...
info_outline
Episode 399: James Choi - Portfolio Theory in a Spreadsheet
The Rational Reminder Podcast
In this episode, we welcome back James Choi, Professor of Finance at the Yale School of Management, to unpack one of the most important—and misunderstood—questions in personal finance: How much of your portfolio should be in stocks? Drawing on his new paper, Practical Finance: An Approximate Solution to Lifecycle Portfolio Choice, James walks us through the classic portfolio choice problem first solved by Robert C. Merton, later extended by Francisco Gomes and co-authors, and now made dramatically more usable through a spreadsheet-based approximation. We explore how risk aversion, wealth,...
info_outline
Episode 398: Tom Hardin - Ethics, Financial Crime, and Redemption
The Rational Reminder Podcast
In this episode, we sit down with Tom Hardin, also known as “Tipper X,” the former hedge fund analyst who became one of the most prolific informants in the largest insider trading crackdown in U.S. history. Tom walks us through his journey from rule-following soccer referee in Georgia to Ivy League graduate and rising Wall Street analyst—before crossing the line into insider trading at age 29. What makes this conversation so compelling is not just the crime, but how ordinary it felt at the time. Tom explains how small rationalizations, cultural pressures, ambition, and the normalization...
info_outline
Episode 397: Hendrik Bessembinder - Constant Leverage & Measuring Investor Outcomes
The Rational Reminder Podcast
In this episode, we welcome back return guest Hank Bessembinder for a deeply analytical conversation spanning leveraged ETFs, volatility, and the future of performance measurement. Hank walks us through his latest research on leveraged single-stock ETFs, clarifying the misunderstood concept of “volatility decay” and decomposing returns into rebalancing effects and frictions. The results are striking: meaningful underperformance relative to simple levered benchmarks, driven by both embedded costs and the mechanics of daily resets. In the second half, we shift gears to a more foundational...
info_outline
Episode 396: Theresa Ebden - Protecting Investors at the OSC
The Rational Reminder Podcast
In this episode of the Rational Reminder Podcast, we are joined by Theresa Ebden, Vice President of the Investor Office at the Ontario Securities Commission, for a deep dive into how regulators are thinking about modern investor risks—from AI-powered scams to finfluencers and the gamification of investing apps. Theresa explains how the OSC works to protect investors through policy, education, behavioral research, and direct engagement with the public, and why investor education is one of the most powerful tools regulators have. Key Points From This Episode: (0:01:55) Overview of the OSC...
info_outline
Episode 395: Charles Chaffin - The Psychology of Financial Planning
The Rational Reminder Podcast
Ben Felix and Braden Warwick are joined by Dr. Charles Chaffin, a leading voice in financial psychology, to explore why investors so often act against their own best interests—and how better tools and frameworks can help bridge the gap between rational plans and real human behavior. The conversation blends behavioral finance, goal setting, and risk profiling, while also introducing a new evidence-based risk tolerance questionnaire now being made publicly available to listeners. The episode digs into why humans are wired for short-term survival rather than long-term optimization, how biases...
info_outline
Episode 394: Equal Weight vs. Market Cap Weight Index Funds
The Rational Reminder Podcast
Equal-weighted index funds sound like an elegant solution to some of today’s biggest investor anxieties: high market concentration, elevated valuations, and outsized influence from a handful of mega-cap stocks. In this episode of the Rational Reminder Podcast, Ben Felix, Dan Bortolotti, and Ben Wilson take a deep, evidence-based look at whether equal weighting actually improves portfolios—or simply introduces new risks under a different name. The discussion breaks down how equal-weighted indices differ fundamentally from traditional market-cap-weighted indexes, why equal weighting has...
info_outlineEqual-weighted index funds sound like an elegant solution to some of today’s biggest investor anxieties: high market concentration, elevated valuations, and outsized influence from a handful of mega-cap stocks. In this episode of the Rational Reminder Podcast, Ben Felix, Dan Bortolotti, and Ben Wilson take a deep, evidence-based look at whether equal weighting actually improves portfolios—or simply introduces new risks under a different name. The discussion breaks down how equal-weighted indices differ fundamentally from traditional market-cap-weighted indexes, why equal weighting has historically outperformed in certain periods, and what’s really driving those results beneath the surface. The team explains how equal weighting tilts portfolios toward smaller, cheaper, and more volatile stocks, while also systematically trading against momentum due to frequent rebalancing.
Key Points From This Episode:
(0:01:10) Introduction to Episode 394 and discussion about declining enthusiasm over long podcast runs.
(0:02:00) PWL Capital’s growing work with institutional clients and why index-based approaches are rare in that space.
(0:05:12) Episode topic introduced: equal-weighted index funds and why listeners keep asking about them.
(0:06:00) Definition of market-cap-weighted vs. equal-weighted indexes using the S&P 500 as the main example.
(0:07:14) Historical outperformance of equal-weighted S&P 500 indexes and why start dates matter.
(0:09:00) Equal weight vs. cap weight performance over the last decade: meaningful recent underperformance.
(0:10:21) Market concentration concerns and why equal weighting appears attractive during periods of high valuations.
(0:12:00) Why market-cap-weighted indexes do not mechanically buy more overvalued stocks as prices rise.
(0:16:14) Trading costs explained: explicit vs. implicit costs and why turnover matters more than TER.
(0:19:16) Capital gains, tax efficiency, and reporting differences between Canadian and U.S. funds.
(0:21:07) Market concentration historically shows little relationship with future returns.
(0:24:58) Volatility comparison: equal-weighted indexes are meaningfully more volatile due to small-cap exposure.
(0:25:12) Equal weighting increases exposure to small-cap, value, and high-volatility stocks.
(0:28:58) Sector distortions created by equal weighting and why this represents uncompensated risk.
(0:31:21) Unintended consequences: sector bets, security-level overweights, and forced rebalancing.
(0:32:30) Turnover is roughly 10× higher in equal-weighted funds than cap-weighted equivalents.
(0:33:15) Equal weighting behaves as a systematic anti-momentum strategy.
(0:34:02) Multi-factor regression results: positive size and value exposure, negative momentum loading.
(0:36:33) Rebalancing frequency trade-offs and how quarterly rebalancing amplifies momentum drag.
(0:42:21) Comparison with alternative approaches that target similar factor exposures more efficiently.
(0:44:47) Why backtests are seductive—and why live fund results matter more.
(0:47:40) Investor behavior, uncertainty, and the constant search for strategies that “fix” the market.
(0:48:41) Factor investing in disguise: most deviations from cap-weighting are just factor tilts.
(0:53:06) Equal weighting as an acceptable strategy—if investors understand and accept the trade-offs.
(0:57:18) Listener feedback, enthusiasm jokes, and discussion about Spotify video uploads and audio speed.
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/
Dan Bortolotti — https://pwlcapital.com/our-team/
Dan Bortolotti on LinkedIn — https://ca.linkedin.com/in/dan-bortolotti-8a482310
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)