10X Captures 20% of All South African Passive Flows In The First Three Quarters of 2024, Achieving Record AUM Growth

Sanlam’s landmark deal with NinetyOne late last year saw one of the South Africa’s largest managers outsource its active investing assets to focus on passive growth. This is by no means a one-off deal, but the latest milestone showcasing the 3x rise in passive assets over the last decade. However, passive investing is still barely 10% of investable assets in South Africa, compared to 50% now in the US, which reached this landmark in 2024.

At the US’s current passive penetration level, South Africa’s passive AUM would be worth $190bn, the market opportunity which 10X from inception has focused on serving. Meanwhile passive investing has already evolved far beyond index replication and ‘smart beta’ (versus managers seeking active ‘alpha’) to offer versatile solutions for clients' specific needs. Evolving with this trend, 10X is South Africa’s fastest growing passive investment platform today.

The Sanlam deal confirms our view that active managers will consolidate while the largest asset aggregators (insurers and banks) embrace passive strategies as their primary growth engine. It sets the tone for the type of positive competition we would expect in the asset management industry as a number of parties position in the passive investment category.

As the country’s largest independent passive investment platform, 10X has built a highly scalable investment engine for low-cost rules-based tailored offerings. Along the way we've assembled a world-class investment team and built all the infrastructure needed to deliver white-label solutions. These are key ingredients behind more than doubling our AUM to $3.0bn+ in the last 2 years, and why our net flows rank second in the entire South African market (we captured 20% of all passive inflows in the first three quarters of 2024), making us today the only passives platform amongst the top 10 asset managers by inflows.

The Market Leader in Passive Investment Products

Our investment manufacturing capabilities extend from multi-assets to fixed income and real estate. We use this breadth to tailor specific solutions for clients, which we deliver through our white label solutions ManCo, specifically designed for the legal and compliance requirements of the South African market. At the heart of our operation lies Nexus, our state-of-the-art platform that integrates PM/trading with service providers through Bloomberg AIM. Nexus enables efficient, tech-driven processes for cash management, operational workflows, and reporting.

As a result, we’ve been able to roll out:   

• A wide range of unit trusts and ETFs through for multiple distribution channels, that provide exposure to both local and offshore markets   
• Sophisticated Regulation 28 compliant multi-asset funds with 45% offshore capability
• A range of client driven solutions in fund format or segregated mandates   

Beyond these we have also built a unique position as an independent manager providing investment solutions for discretionary fund managers (DFMs) and other investment aggregators. Today, 10X is the preferred provider for DFMs who represent a ~$30 billion market, and multi-managers who total ~$60 billion such that today 10X's footprint spans multiple channels: 

• Comprehensive unit trust range available on LISPs and investment platforms at wholesale pricing
• Innovative JSE-listed ETFs and AMETFs designed for wealth managers and portfolio managers
• Groundbreaking product launches

These groundbreaking product launches include: 

• South Africa's first actively-managed ETF (May 2023)
• The first comprehensive managed income solution in listed format (10X Income AMETF, share code INCOME)
• The pioneering 'self-indexed' AMETF (10X All Asia AMETF, share code APACXJ)

As Anton Eser, CIO at 10X Investments, explains, "Our segregated mandates and bespoke solutions capabilities allow us to create truly customised investment strategies that align fully with specific client needs."

Future Growth

At 10X we believe we have all the elements in place to continue scaling faster than the market. We see deals like Sanlam/NinetyOne as further validation that the shift to passives in South Africa driving passive share of total market upwards.

At the same time, even with current market size, 10X has an already-visible target growth opportunity of $50bn AUM to ‘aim at’ (passive Collective Investments Scheme projected AUM in 2028), creating a clear line of sight from today’s $3bn to $5bn over the next 2-3 years. With greater resources 10X has the potential to become a $10bn+ AUM passives leader in South Africa in the next few years, simply by continuing to expand our technical capabilities, partnerships with intermediaries and multi-pronged client acquisition process.

Post-election South Africa is ‘open for business’ and the country’s investment landscape is shifting even faster towards passive investment strategies. With our best-in-class combination of technology, distribution, product development and customisation, 10X has all the elements in place to continue gaining share not just in 2025, but over the next five to ten years.  

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 Financial Service Provider# 28250 and S13B Pension Fund Administrator #24/444.