10X INVESTMENT GUIDE FOR RETIREMENT FUNDS

Transcription

1 10X INVESTMENT GUIDE FOR RETIREMENT FUNDS More money when it matters most. Our low fees and award-winning investment strategy give you more money at retirement. 10X manages over R8bn in assets for South Africa s industry leaders.

2 OUR MANIFESTO We re for change. We re for our customers. The retirement industry has done disproportionately well for itself, but has failed its clients. It complicates, obscures, overcharges and underdelivers, profiting handsomely in the process. But institutions so big, and making so much money, are not motivated to change. So, as an investor, you will continue to do poorly with the establishment. Here is our alternative: We don t complicate what can and should be simple. We don t offer endless options, and then recommend you pay for advice to help you navigate those options. We offer a single strategy, because we believe it s the best strategy. We don t charge high fees because they contribute to low returns. At the industry s average of 3%, fees can take half your money. At under 1%, our fees are less than half the industry s, and your money grows much more. We don t charge performance fees (levied even when a fund doesn t perform), unnecessary advice fees, unfair penalty fees or disgraceful marketing fees. We charge one single fee, period. We don t hide or obscure our fees. We re transparent about them because we have nothing to hide. We don t dabble in complex or opaque investments. We invest your money the same way we invest all our clients money in a diversified mix of local and international companies which is the only proven way to maximise your investment. We don t pick stocks or try to guess what to buy and sell, when. It doesn t work and you usually lose. We simply track an index to match the returns of the market. It s proven to be a vastly more successful, more dependable method to growing your investment. We don t claim or even aim to have the best performing portfolio every year. Nobody does. We also won t promise that your investment will never fall in value. Nobody should short term drops are an expected part of long term growth. But over time and after fees, our performance will always be better than most other funds. In an industry characterised by salesmanship, we care to be known for our stewardship. And while most investors end up with less than they should, ours will get more than they otherwise could.

3 We want to get people more money when they retire. Only 6% of South Africans can retire comfortably. While that s partly because of individual behaviour (people not saving enough, or cashing out their savings), it s largely because of the industry s behaviour. The investment industry charges too much for products that deliver too little. It makes a lot of money off you, and not enough for you. We re changing that. A single retirement strategy that actually works. The investment industry offers thousands of different products, but it can t tell you which one is best. It has too many options, but no solution. 10X has no options, and one solution. We believe it s the best one. We ve tested and backtested it, and proven that it would have worked over every period in the last hundred years. So all our customers benefit from the same, single, simple, award-winning strategy. It combines four core principles: 1. Index tracking 2. Low fees 3. Diversification 4. Life stage investing 10X.CO.ZA / 2

4 10X's recipe for retirement success. 1. Save 15% of your income for 40 years 2. Invest it in a high growth index fund 3. Pay fees of 1% or less The first of those is up to you. We take care of the last two. 3 / 10X.CO.ZA

5 INDEX TRACKING Fortunes. Not fortune tellers. Broadly speaking, there are two different kinds of investment funds: actively managed funds, and index (or passively managed) funds. Active fund managers try to outfox the market by stock picking choosing what to buy and sell, when. They look for the needle in the haystack. to do so is really nothing but a best guess. Call us conservative, but we d rather not take this kind of risk with your retirement money. Index funds offer you the best chance of steady and reliable investment growth over time. Index funds, on the other hand, buy the whole haystack. They track an index, following the market as a whole. If the overall market were to grow by 10%, so, logically, would your investment. The problem with actively managed funds is that only one in five ever beats the market. And it s never the same ones consistently, year after year. It s proven to be impossible to predict what s going to transpire, and claiming Only 1 in 5 active funds will beat the index. Which one do you think it is? 10X.CO.ZA / 4

6 LOW FEES Every 1% counts. Actively managed funds are expensive to run far more so than index funds. That s why some retirement fund providers will charge 3% or more of your investment balance in total fees. It s substantially more than 10X charges, which is always less than 1% before VAT. Here s the maths. For every 1% you save on fees, your investment can return as much as 30% more over a working life of 40 years. By saving 2%, your investment could return as much as 60% more than many funds over the same time. By charging less than half the industry average, 10X ensures that more of your money is working to make you more money. As Morningstar research discovered, Costs are the most important indicator of future returns. Low cost funds beat high cost funds in every period measured. High fees can ruin your retirement investment. If you save R1,000 a month for 40 years earning a 5% per annum return after inflation, you ll build a retirement investment of R1.5 million in today s money. The chart below shows the impact of an extra 1% in fees on your investment. SAVINGS POTENTIAL RETURN LOST TO FEES R1,500,000 R1,150,000 R900,000 R700,000 R600,000 0% 1% 2% 3% 4% EXTRA FEES AS A % OF INVESTMENT BALANCE PA 5 / 10X.CO.ZA

7 DIVERSIFICATION Diversify. And spread the risk. Putting all your investment eggs in one basket isn t called investing it s called gambling. With 10X, your money is invested across a spread of over a thousand different investments. This not only protects your savings but also provides enhanced long-term returns. With 10X, your savings are invested in: Equities (shares in well-established companies) Property Bonds (interest-earning investments) Cash Investment Class Index Tracked Index Description SA Equity SA Property SA Bonds SA Cash International Equity International Cash *10X Top 60 SA Share Index *10X SA Property Index South African Government Bonds Index South Africa Government Inflation-Linked Bond Index AF Short-Term Fixed Interest Index Global All Cap Index Emerging Markets Index US Dollar exchange rate Top 60 shares on the JSE, with a 6% cap per single share Top 14 property shares on the JSE, with a 20% cap per single share Top SA Government Bonds with a fixed coupon Top Inflation-linked SA Government Bonds Interest rate on 3 month SA cash deposits Top 7,000+ global stocks Top 900+ emerging market stocks US Dollar exchange rate *Indices calculated by S&P Dow Jones Indices S&P disclaimer: The 10X Top 60 SA Share Index and 10X SA Property Index (the Indices ) is the property of 10X Investments (Pty) Ltd, which has contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) to calculate and maintain the Index. The Indices are not sponsored by S&P Dow Jones Indices or its affiliates or its third party licensors (collectively, S&P Dow Jones Indices ). S&P Dow Jones Indices will not be liable for any errors or omissions in calculating the Index. Calculated by S&P Dow Jones Indices and the related stylized mark(s) are service marks of S&P Dow Jones Indices and have been licensed for use by 10X Investments (Pty) Ltd. S&P is a registered trademark of Standard & Poor s Financial Services LLC ( SPFS ), and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC ( Dow Jones ). 10X.CO.ZA / 6

8 LIFE STAGE INVESTING Making the most of time. Whether you re expecting to access your retirement savings relatively soon, or your retirement is some way off, 10X will structure your portfolio in a way that makes the most of the time available to you. The four investment categories mentioned on the previous page each have their own advantages and disadvantages. Shares and Property (which are considered growth investments) offer high expected longterm returns, but are also liable to fluctuations over time, especially in the shorter term. Bonds and Cash (which are considered defensive investments) provide lower longterm returns, but are far more resilient to market fluctuations and generally offer more stable results. The weighting of your portfolio, then, must be considered in terms of your time horizon, or your expected retirement date. The closer this date, the less you can afford the risk of a portfolio weighted towards growth investments. If the date is sufficiently far off, your investment will have time to recover from fluctuations, and still provide you with higher returns. This is our investment approach and is called the 10X Default Glide Path. We shift your money from a growth-oriented portfolio (10X High Equity Portfolio) to a more conservative portfolio (10X Defensive Portfolio) as your retirement draws near. However, if your savings are going to remain invested at retirement (for example, if you plan to purchase a living annuity), then you have a longer time horizon than your retirement date. In this case you may prefer to remain invested in a portfolio with predominantly growth investments. At 10X, you may choose to opt out of the Default Glide Path and invest in the 10X High Equity, 10X Medium Equity or 10X Low Equity Portfolios. The accompanying graph shows the investment weightings of the six 10X Life- Stage portfolios. The longer the time frame, the greater the weighting towards growth investments. The returns are the expected long-term returns on the 10X portfolios. However, in the short term, the portfolios are likely to deviate from this significantly. 7 / 10X.CO.ZA

9 10X Life-Stage Portfolios HIGH SHORT-TERM RETURN FLUCTUATIONS LOW % EQUITY % PROPERTY % BONDS & CASH 72% 60% 50% 40% 25% 7% 5% 8% 10% 8% 6% 5% 23% 32% 40% 52% 69% 88% INVESTMENT TIME HORIZON > 5 YEARS ± 5 YEARS ± 4 YEARS ± 3 YEARS ± 2 YEARS ± 1 YEAR EXPECTED LONG-TERM RETURN (AFTER INFLATION) 6% HIGH EQUITY 5% 4% 3% 2% 1% 60% EQUITY MEDIUM EQUITY 40% EQUITY LOW EQUITY DEFENSIVE Source: 10X Investments, Dimson, Staunton and Marsh 10X.CO.ZA / 8

10 Time. It s on your side. Markets crash, unfortunately. And even though this generally only happens once every twenty-five years, we d never attempt to predict the next one. As this graph shows, such an event may mean that your investment value decreases over the short-term. But take a look at how the three 10X Portfolios performed during and after the global financial crisis of 2008/9. The Low Equity portfolio incurred the smallest losses over the crisis period, but by August 2012 had the lowest return of the three. The Medium Equity portfolio weathered the crash reasonably well. And while the High Equity (long term) portfolio took the biggest hit over the crisis, by October 2013 it had gone on to return more than double the initial deposit of R100 shown on the graph. That s why it s vital that you re invested in a portfolio that best meets your life-stage needs and your time horizon. 10X HIGH EQUITY 10X MEDIUM EQUITY 10X LOW EQUITY R 300 R 250 R 257 R 250 R 224 R 200 R 150 R 100 R 50 Dec-2007 Jun-2008 Dec-2008 Jun-2009 Dec-2009 Jun-2010 Dec-2010 Jun-2011 Dec-2011 Jun-2012 Dec-2012 Jun-2013 Dec-2013 Jun-2014 Dec-2014 Jun-2015 Dec-2015 Jun-2016 Dec-2016 Source: 10X (December December 2016) 9 / 10X.CO.ZA

11 Superior investment performance. R100 invested in the 10X High Equity Fund in Jan 2008 (10X s inception) would have grown to R257 by 31 December 2016, before fees. This compares to R244 with the average fund manager before fees. Assuming a 1% fee saving with 10X, the return from the average manager reduces to R223. Over the period, 10X has consistently outperformed the average fund manager before fees and by almost 2% pa including a 1% fee saving, since inception. 10X HIGH EQUITY MANAGER AVE. 10X RETURNS VS LARGE FUND MANAGER MNGR AVE. LESS 1% PA FEE Cumulative value of R100 invested on 31 December R257 R244 R Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Source: 10X, Alexander Forbes Large Manager Watch Survey, Dec December 2016 INVESTMENT RETURNS PA (BEFORE FEES) As at 31 Dec X High Equity Manager Ave. Mnger Ave. less 1% fees 10X Difference 3 Year 7,9% 7,7% 6,7% 1,3% 5 Year 13,6% 13,0% 11,9% 1,7% 7 Year 13,1% 12,5% 11,3% 1,7% Since inception Dec 07 11,1% 10,4% 9,3% 1,7% 10X.CO.ZA / 10

12 The beauty of simplicity and transparency. Index tracking. Low fees. Diversification. Life stage investing. These are the ingredients of 10X s single, simple, retirement strategy. A simple strategy means a simple product. A simple product means simplified administration. And that means reduced costs. 11 / 10X.CO.ZA Simplicity also allows for clarity and transparency in our regular reports. Transparency and openness mean you re never kept from what you re paying or how your investment is performing. Which is right, as we have nothing to hide.

13 Here we are. One of the few times we believe choice is a good thing is when it comes to your getting in touch with us and keeping tabs on your investment. pertinent news and considered opinion on matters of retirement. You can download our mobile app, available for Android and ios, and easily access your investment information on the fly. You can visit our website at 10X.co.za, where you can log in securely and track the progress of your investment any time, day or night. You can also access retirement calculators and our award-winning blog, where we share If you prefer to deal with one of our staff members, you can phone us on , or info@10x.co.za. 10X clients can SMS the word Balance to at any time to receive their current investment value. What s in a name? The name 10X (pronounced ten-ex ) comes from the late Andy Grove, former CEO of Intel. He described a force that changes the fundamental rules of an industry as a 10X force, something that makes it ten times harder for others in the industry to compete. It s an appropriate name for us, given our challenge to the fundamentals of the retirement industry. 10X.CO.ZA / 12

14 Our clients We manage several billion rands in private and corporate retirement investments. We serve companies in all industries, including finance, retail, education, telecommunications, property, media, advertising, engineering and technology sectors. 10X shareholders include Old Mutual Private Equity and management. 13 / 10X.CO.ZA

15 Cape Town Suite 105, Foyer A, Sovereign Quay 34 Somerset Road, Green Point Cape Town 8005 T: Johannesburg Block D, Upper Grayston Office Park 152 Ann Crescent, Sandton Johannesburg, 2031 T: E: F: W:

16 PROUD WINNER Batseta (the Council of Retirement Funds) Annual Awards, Balanced Fund Manager Of The Year Employee Benefit Administrator Of The Year Technology Provider Of The Year 2016 Awards Best Investment Practices, Institute of Retirement Funds Africa PWC Vision to Reality Entrepreneurial Awards Suite 105, Foyer A, Sovereign Quay 34 Somerset Road Green Point, WC, 8005 T (0) E invest@10x.co.za W facebook.com/10xinvestments twitter.com/10xinvestments za.linkedin.com/company/10x-investments 10X Investments is a licensed Financial Services Provider #28250 and S13B Pension Funds Administrator #24/ X shareholders include Old Mutual Private Equity.