10X Investments

One solution

Industry problem 10X Solution

Choices

The industry provides hundreds of investment choices without a preferred solution. Choice adds cost, complexity and the need for advice.

Solution

10X has one solution and no confusing choices. You are invested in an optimal portfolio based upon your age.

The investment strategy is tailored to each individual investor

We invest your money according to your retirement date, via life-stage portfolios — the relevant investment advice is embedded into the solution.

Asset mix: 10 Life-stage portfolios

Retirement investing - asset allocation

The longer your time to retirement, the higher your allocation to shares — the asset class with the highest expected long term return.

If you are more than nine years away from your retirement date, you will be allocated to a portfolio with the highest exposure to shares (75%). This portfolio will produce highly variable returns over the short term and may suffer losses of 20% or more over a one or two-year investment period. However, over the long term this portfolio is expected to produce the highest returns, around 5% pa after inflation.

The shorter the investor’s time to retirement, the greater the focus on capital preservation.

With less than nine years to your retirement date, you will be allocated to portfolios with lower share exposure and higher exposure to bonds and cash (lower risk assets).

  • Why do we use life-stage portfolios?

    Range of SA real share annualized returns between 1900 and 2009


    Source: Morningstar, 10X Investments

    Shares (equities) provide the highest expected returns — around a 7% pa real return — but this return is uncertain and variable, especially over shorter investment periods. From a risk and return perspective, investors close to retirement should not have a high share weighting in their portfolio.

    However, time transforms shares from high risk to low risk assets. As the time horizon increases, the risk of shares performing poorly decreases. Since 1900, the worst real return from shares over any 30 year investment period has been 4% pa. Although future investment returns are not guaranteed, there is no reason to believe SA shares will deliver materially different long-term real returns in future.

  • Why do we not offer investment choice?

    It has become common to allow employees to choose from a selection of investment managers and funds.In our opinion, this is not a desirable development. We see three problems:

    1. Few members exercise choice: typically 80% of employees end up in the default fund.
    2. Of the members who do exercise choice, few have the insight to select investment funds appropriately.
    3. Choice increases costs.

    So we do not offer choice — it is not in our investors’ best interest.