10X expands investment universe, lowers risk (and costs)

10X has launched the 10X Top 60 SA Equity Index Fund, an index-tracking portfolio for investors looking for exposure to broad South African equities with lower concentration risk than headline indices.

The 10X Top 60 SA Equity Index consists of the 60 largest shares on the South African markets, with a 6% cap applied at the semi-annual rebalance.

The fund, which unlocks greater mid-cap exposure and broader diversification than headline large-cap equity indices, provides an ideal low-cost core SA equity building block in a portfolio, according to 10X CEO Tobie van Heerden.

“The fund provides exposure not currently available in South Africa but clearly in demand from both 10X clients and broader market participants,” says van Heerden, adding that a number of 10X's clients had made specific requests for the 10X Top 60 SA Equity Index to be a standalone 100% SA Equity offering.

“Prospective institutional clients have also indicated interest, given the lack of alternatives in the South African landscape.”

To find out more about the 10X Top 60 SA Equity Fund, download the brochure here

The proprietary index has been used since 2008 as the core SA equity building block in 10X multi-asset portfolios, which have a demonstrated history of superior performance at a very low cost. The 10X Top 60 Equity Index delivered 27.7% return in the 12 months to 30 September 2021 and 11.3% annualised over 10 years.

The 10X Top 60 SA Equity Index provides a solution for investors who want to address this risk, which is underlined when looking at the collective weight in the Top 5 Holdings:

The focus on diversification is not limited to single-stock risk, but comes through with more balanced sector exposure when compared to the more resource-heavy All-Share Indices (ALSI) or financials-heavy Shareholder-Weighted Indices (SWIX). The more balanced exposure in the 10X Top 60 SA Equity Index has historically provided more consistent returns through the cycle, removing the implicit bet on the relative performance of resources vs financials. 

Chris Eddy, 10X's Head of Investments, says investors can expect performance in line with broad SA equity markets. “The greater mid-cap exposure will provide a broader universe without introducing liquidity risk, and the 6% cap on individual shares will limit concentration risk, meaning more predictable outcomes making the 10X Top 60 SA Equity Index Fund well suited to be a core equity holding.”

Investors can also expect low pricing, Eddy added. “Rebalancing semi-annually (rather than the more common quarterly) is representative of the way the index has been designed in the context of the South African market to ensure efficiency, enabling a product that seeks to maximise investors’ probability of meeting their goals.”

Given the 6% cap, rebalancing every six months has led to reduced index churn over rolling 12-month periods reducing transaction costs, says Eddy. 

“The 10X Top 60 SA Equity fund expands the universe of easily investible SA equities and gives broader exposure to medium-sized companies that usually fall under the radar,” adds 10X CEO van Heerden. 

“The additional companies include many names that will be familiar to South Africans, from Pick n Pay to Barloworld, Netcare and Truworths. Many are household names that individuals buy products from and can relate to but do not form part of the JSE Top 40 companies.”

To find out more about the  10X Top 60 SA Equity Fund, download the brochure here

The content herein is provided as general information. It is not intended as nor does it constitute financial, tax, legal, investment, or other advice. 10X Investments is an authorised FSP (number 28250)

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