10X Living Annuity funds: Conservative vs balanced vs aggressive

A living annuity is a post-retirement product that will provide you with an income during your retirement years, and one of the most important decisions that you can make is the fund selection that you invest your capital in. You’ll have to be strategic when it comes to your fund selection. For example, a very conservative fund choice may result in lower growth, while a very aggressive fund selection may lead to too much market volatility. In this article, we will take a more in-depth look at the various 10X funds on offer, including helping you to decide which fund or funds may best suit your individual needs and situation.

Understanding what a living annuity is

A living annuity is a flexible retirement product that keeps your capital invested in the market while also allowing you to draw an income from these savings for your retirement years. Your living annuity is funded by your retirement savings that have been accumulating in your retirement annuity, preservation fund or similar. You are able to select both your underlying funds and your drawdown rate.

Your drawdown can be amended at your policy anniversary date each year, in order to cater to changing needs over time. This drawdown rate is the percentage of the total value of your living annuity that you draw as income. This rate can be between 2.5% and 17.5% per annum. Your income payment frequency can be selected according to your preferences from annually, biannually, quarterly or monthly.

With 10X, you’ll have the freedom to choose between a selection of carefully curated funds, each with a different mix of assets and geared towards different investor profiles.

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Overview of 10X Living Annuity fund options

10X offers a wide range of funds within the living annuity “wrapper”. These funds are cost-effective, index-based funds that offer investors access to a wide range of local and offshore assets. The funds have been carefully and strategically selected so that you, as the investor, do not need to do this job. The funds will usually include a selection of the different asset classes as well as some local and offshore assets, offering you built-in diversification. There are generally 3 different categories of funds:

• Conservative funds: These would be your low-equity funds, which focus more on capital preservation.
• Moderate funds: Here, we have your more balanced funds, which include some equity exposure.
• Aggressive funds: These are your high-equity funds that are focused on growth over the long term.

Let’s have a quick look at a few of the 10X funds on offer to investors:

Conservative 10X Fund Example:

This fund includes bonds and cash, and also a smaller percentage of growth assets. It is mostly invested in local assets but also includes some international exposure. This fund would be suited to an investor who is looking at an investment period of 1 to 3 years.

Conservative funds are low-equity funds, and they may instead include a higher percentage of bonds and/or cash. You can expect lower volatility but also lower returns, which may make them a better choice for the short-term investment horizon. If you are looking at a longer timeline, stability may come with the cost of lower growth and also inflation risk. The 10X Defensive Fund has had an annualised return of 11.1% over the past five years.

Balanced 10X Fund Example:

This balanced fund is a medium to long-term fund with a minimum investment period of 3 years. It includes a mix of both local and international assets, with more growth assets compared to the percentage of bonds and cash.

Balanced funds may include a mix of the different asset classes. There might be some volatility and potentially a balance between income and growth. There may be some volatility, but less inflation risk than a more conservative fund. The 10X Moderate Fund has seen an annualised return of 12.6% over the past five years.

Aggressive 10X Fund Example:

This is a 10X flagship fund, providing investors with access to both local and international assets. There is a higher percentage of growth assets, but it is still not a 100% pure equity fund. This fund would be well-suited to an investor who is looking to grow their capital over the long term, ideally 5 years plus.

An aggressive fund will include a higher percentage of equities. There may be higher volatility, but also the potential for greater returns in the long term. This will be the best option to avoid inflation risk - but you should expect short-term market volatility. The 10X Your Future Fund has seen an annualised return of 13.3% over the past five years.

Asset allocation — The real difference between the funds

Asset allocation plays the biggest role in the performance of your living annuity, accounting for over 90% of returns, as seminal research from Brinson, Singer and Beebower shows. The different assets on offer would usually include the four main asset classes. These asset classes are, namely, equities, real estate, bonds and cash.

Equities are the most volatile of the asset classes, but you can also expect the best returns over the long term. As data suggests, equities have historically produced returns above inflation by around 7% annually, over the long term (based on JSE All Share Index performance versus CPI from 1960-2020), although past performance does not guarantee future results. Real estate, also known as property, can also generate some good returns, as well as be a good hedge against inflation. Bonds will add stability to a portfolio, but may generate lower returns. While bonds are generally seen as a conservative option, they may still outperform expectations. Cash is the most stable and liquid of the asset classes, and it will also likely produce the lowest returns.

If you have a fund that includes a higher percentage of equities, you may find more volatility but also better returns over the long run. A fund that includes fewer equities may be less volatile, but there may also be less growth seen in the portfolio.

When it comes to asset allocation, you want to select the funds that align well with your risk profile and investment timelines; this is your investor profile. You would also want to ensure that your asset allocation always matches your long-term financial goals and plan.

A living annuity is not subject to Regulation 28 of the Pension Funds Act, meaning that there are no limits on the percentages that you are allowed to invest offshore. 10X is able to offer a living annuity that can be invested 100% offshore. Not all providers are able to offer this.

We offer investors a wide range of well-diversified funds. You can explore our funds page for more information.

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The 10X investment strategy

10X makes use of an index-tracking investment strategy that focuses on the long-term, consistent returns for clients. An index-tracking strategy is when a benchmark index, such as the S&P 500, is mirrored in order to try to get the same returns as this particular index. There are usually fewer activities associated with this kind of investment strategy, which may then mean lower costs. This can ultimately mean fewer fees passed onto you, as the investor.

Active management is when there is a manager who is looking to select the winning stocks that will potentially produce the best returns. This kind of strategy may mean more activities such as research, analysis and trading costs, which can then result in higher costs being passed onto investors. This may, however, not always produce the desired results.

The S&P Indices Versus Active (SPIVA) Scorecards track the performance of actively managed funds against their benchmarks globally. According to the latest SPIVA South Africa Scorecard (as of June 2025), 67.61% of South African actively managed equity funds underperformed the S&P South Africa DSW Capped Index over the ten-year period ending June 30, 2025.

Living annuity fees — How they affect each fund choice

10X makes use of a low-cost, simple and transparent fee structure. A small difference between fees can compound over time and potentially impact the long-term growth of your living annuity. As you are already drawing an income from your living annuity, you would want as many returns to be reinvested as possible. High fees may mean that there are fewer returns to reinvest and potentially grow over time. Lower fees may result in more returns being available to reinvest and take advantage of the potential compound growth over time.

Your Effective Annual Cost (EAC) is a standardised metric that allows you to see the total fees and costs associated with owning an investment product over a one year period of time. All factors being equal, a higher EAC would mean that less of your investment returns can be reinvested and potentially grow and compound over time, while a lower EAC may mean that more returns may be reinvested and allowed to potentially grow over the long term.

The EAC should be displayed on your investment statement or requested from your service provider. Of course, the EAC of an investment is just one factor to consider when comparing different service providers. At 10X, we offer this useful EAC calculator, which can be used to compare the EAC of your current service provider with that of 10X. It is a part of our free online suite of tools available to investors.

There are some fees that you can expect to see deducted from your living annuity. These are as follows:

• Management fees: These are the fees charged for the running of the fund.
• Advisor fees: An advisor will charge fees for the advice and the services that they offer. There will often be an initial and an ongoing fee charged.
• Administration fees: There are also fees charged for administration tasks. These will be for tasks such as compliance, reporting and tax.

Let’s have a look at an example which will help to explain the impact that fees may have on your living annuity. We will assume the following for this example:

• Investment amount: R4 million
• Investment period of 25 years
• Drawdown rate: 4% (frequency of payment: per annum)
• Return of 12% per annum
• An inflation rate of 6%

Example 1 (0.86% Fees): Real investment value is approximately R4.7 million.

Example 2 (3% Fees): Real investment value is approximately R2.9 million.

This example illustrates the effect that a small difference in fees can have on your real investment value when these fees are compounded over time. This example is for illustrative purposes, and real results may vary. Our fees at 10X are kept low due to our passive investment strategy. Fees for retirement products are usually 1% or less, depending on the product selected and the amount which is invested. Please explore our products for the most up-to-date fee information.

Common mistakes when choosing living annuity funds

Let’s have a look at some common mistakes you can make when looking to choose the correct fund or funds for your living annuity:

• Ignoring fees: It’s important that you check the fees that apply to the fund that you wish to select. If the fees are high, you may look at other options.
• Being too conservative with your fund selection early on: You want to avoid being too conservative with your fund selection too early on. You want to aim for growth in your portfolio, and this may mean including equities in your portfolio and ensuring that your fund selection is not too heavily invested in cash.
• Not reviewing your asset allocation: It’s vital that you review your asset allocation at least annually. This is to ensure that it is still well-aligned with your investor profile and long-term financial goals.
• Switching funds during a market crash: It can be tempting to want to switch to more conservative funds during a market downturn, but this should be avoided, as it may mean that you lose out when the market recovers and instead lock in any losses.

Final thoughts on living annuity funds

Choosing a fund that aligns best with your investor profile and long-term financial goals is key. There is no ‘one size fits all’ when it comes to fund selection, so it is important to understand your individual situation and find the best fit for you. Your fund selection should be reviewed annually and, where necessary, changed in order to fit best fit your new situation. Our experienced 10X investment consultants can assist you with selecting a fund that will suit your situation and help you to balance growth and capital preservation. Don’t hesitate to get in touch today!