FAQ - Unit Trust

Is a unit trust a good investment?

In short, yes. Unit trusts offer a simple way to invest in a wide range of assets. The diversity of these funds makes them comparatively low risk – if one asset dips in value, other investments should hedge against that loss and work to maintain the overall price of each unit. 

How do unit trusts work in South Africa?

The concept itself is quite simple and, when correctly administered, can be an excellent way to ensure consistent returns. A trust pools the money of many investors and these resources are managed and monitored by skilled financial professionals who invest in a mix of equities, bonds, property funds and other assets. This pool is then divided into portions of equal value, which are known as a unit. Each unit has a Net Asset Value (NAV) or price that is consistent with the value of the entire fund. 

How do unit trusts pay out?

In a trust that is income-focused, the fund will pay out regular earnings to each of the investors. This income takes the form of dividends (also known as interest income) and is allocated through a process called ‘income distribution’, which bases pre-tax income on the number of units each investor holds. If the trust is growth-focused, you have the option to reinvest your earnings to build upon your investment – allowing for greater returns down the line.

Can I withdraw money from my unit trust account?

Unless contractually stated to the contrary, yes. With 10X, you can make withdrawals from your unit trust account at any time, with the option of redeeming either a portion or the complete Rand value of the units on your account. If you choose to redeem some of your investment, there is no minimum amount required, as it is entirely subject to the funds you have available in your account. Your investment is yours to use as you see fit – the only consideration is that you will need to confirm whether you want the account to remain active or not.

How much interest does a unit trust pay?

The answer to this question will depend on the unit trust in question, as performance varies and there is no guaranteed dividend on any investment. For accurate interest rates on the unit trust you are considering, we encourage you to get in contact with one of our financial consultants. They will be able to walk you through the details of each of our funds, compare our performance to any other financial service provider, and help you make an informed decision on the best way to invest your money.

Do you pay tax on unit trusts in South Africa?

You won’t pay tax on the initial investment; however, you will be taxed on the profit or dividends (income) that you receive based on your units. This income should be declared to SARS and will be levied at your marginal income tax rate. This includes income from dividends on foreign or offshore investments.

Why invest in a unit trust?

As mentioned above, the wide range of investment options and risk profiles available to unit trust investors make them attractive. Secondly, whether the fund is actively managed or not (as in the case of a passive, or index-tracking fund), these funds require little to no attention from investors themselves, making them an excellent choice for those who aren’t interested in spending hours finding the next great opportunity. Lastly, they are comparatively lower risk because of the diversity of assets, making them a safe and steady choice for individuals who prioritise financial security.

Unit trusts vs mutual funds

In other countries, like the United States for example, there may be a few differences between unit trusts and mutual funds. However, in South Africa, the terms “unit trust” and “mutual fund” are often used interchangeably and they refer to the same type of investment vehicle. Both are collective investment schemes governed by the Collective Investment Schemes Control Act (CISCA), with no legal or practical distinction between the two terms. Both investment vehicles – unit trusts and mutual funds – involve investor’s money being pooled and managed by financial professionals with the aim of generating returns. 

It’s also important to note that both unit trusts and mutual funds, in South Africa specifically, can be either actively or passively managed. Actively managed funds aim to outperform the market through careful stock selection and market timing, whereas passively managed funds seek to replicate the performance of a specific market index. Whether an investment vehicle is referred to as a unit trust or a mutual fund in South Africa, the key considerations for investors remain the same; including the fund's investment strategy, risk profile, fees, past performance, and alignment with the investor's financial goals.

To summarise, investors in South Africa can use the terms “unit trust” and “mutual fund” interchangeably when exploring collective investment schemes, and the choice between the two terms comes down to a matter of preference that does not reflect any inherent differences in the investment vehicles themselves.

Unit Trusts in South Africa: why choose 10X?

Our mission is to make investing beneficial, transparent, and cost-effective. That’s why we’ve crafted our unit trusts to be simple to understand and easy to use. 

Famously low fees

We understand that it can be difficult to feel empowered when sifting through the thousands of available unit trust investment options (many of which are costly). Happily, this isn’t the case with 10X Investments. To open the doors to new investors and encourage individuals to take control of their financial situations, we keep our investment strategy and fund makeup totally transparent, and our monthly fees as low as possible. This means more money goes back into your pocket. 

Investing has never been simpler

Life can get incredibly busy and most people just don’t have the time to navigate through endless and intricate financial information, read pages worth of disclaimers, and fill out never-ending forms. With that in mind, we’re committed to keeping everything simple, quick, and digestible, to improve the experience of each of our customers.

For example, to invest in a 10X unit trust, only three steps are required: deciding on the length of time you want your money to be invested, selecting a fund that suits your timeline, and completing a brief online application. From there, you are ready to begin meeting or exceeding your financial goals and building your portfolio.

Highly diversified portfolios

We pride ourselves on presenting a variety of diverse fund options, allowing for flexibility in choosing the perfect asset allocation for your purposes. Each fund comes with a different focus: some are geared towards long-term growth, while others are focused on short-term gain. The diverse nature of our portfolios also means less risk for investors.

Types of unit trust: what options do you have?

In this section, we highlight three fund options for 10X Unit Trust investments and explore the differences between them:

  1. 10X Your Future Fund: This fund is our flagship offering, and it’s been curated to provide broad exposure to a range of international and local assets and investments via a market-leading asset allocation investment strategy. If you are looking to invest for the long-term, the 10X Your Future Fund could be the perfect choice for you. It has a high risk profile, but with annualised returns of 12.2% and a >40% offshore allocation, it provides investors with significant upside. Currently, 10X Your Future Fund assets under management exceed R18 billion, and we expect this number to grow consistently in future.
  2. 10X Income Fund: Our second core fund is designed to provide investors with a high level of income and long-term stability. It’s smaller than the 10X Your Future Fund but still boasts a respectable 9% annualised return rate. If your time horizon is more than three years, the 10X Income Fund has the potential to provide capital stability and good consistency in returns. 
  3. 10X Defensive Fund: If you have a lower risk tolerance and prefer a steady level of income combined with low volatility capital growth, the 10X Defensive Fund is a good choice. Its low-risk profile comes from the focus on bonds and cash as opposed to property and equities. With an ideal time horizon of 1-3 years and longer, as well as annualised returns similar to the 10X Income Fund, 10X Defensive Fund is an excellent way to build your medium to long-term portfolio.

Unit trust rate of return: what to expect

In the previous section, we touched on the performance of some of our most popular funds.

To give an idea of possible returns, let’s have a look at the 10x Your Future Fund’s performance over a period of 15 years. If you were to invest R100 back in 2008, that money would have grown to about R440 by October of 2023. This represents a more than decent return on investment (these numbers have been calculated on a NAV-to-NAV basis, without the inclusion of taxes, fees, or other variables).

One crucial takeaway is that the 10X Your Future Fund performs significantly better than the benchmark index. This shows that the fund is outperforming the majority of its peers and provides a greater return on investment than many other fund options.

Unit trust Reviews: what do people say about 10X?

In a financial environment teeming with providers and a seemingly endless number of investment opportunities, what sets us apart from the crowd? Well, we’ve given you our view earlier, but you shouldn’t take our word for it. Let’s see what our clients say about us.

Robert James Bond:

Robert explains that there is no safety net in South Africa, and as soon as you begin earning a salary, you should start making provisions for your later years. He states that 10X has been “outstanding” in many respects and finds that the ability to monitor performance electronically has made a major difference to his financial planning. This is further aided by access to our specialists, who “deliver these calculations that you need to do so that you can time your retirement correctly.” 

Robert began his saving journey with a traditional company but decided to change course once he started reading up on investment performance – after realising that the costs involved did not encourage or allow for growth, he decided to instead entrust his portfolio to 10X Investments. While he was “sceptical initially," he discovered that our lower fees greatly increased the value of his investment. Robert ends his interview by reflecting that, through 10X Investments, he has encountered many “high-level” individuals who offered a wealth of information that exceeded his expectations. Overall, Robert’s personal experience with us is fairly typical, and we’re proud to be “establishing a new benchmark in terms of how to be client-focused.”

Felicia Roman:

Felicia, who is 56 years old and semi-retired, was unhappy with the performance of the mature investment policies she had with her previous provider – stating that she was “horrified to see that the fund was growing only by the instalments that (she) was paying.” This mirrors the experience of many others who have previously opted for “established providers” prior to joining us, and who were equally displeased with their returns. After conducting some of her own research, she came across 10X Investments.

After receiving a prompt response from one of our consultants, she was pleased with our straightforward, “very balanced view” of her financial situation. After a brief period of deliberation, she moved the recommended account to 10X Investments and hasn’t looked back since. Beyond our low fees, she was impressed by our approachable and simple method of presenting information – she felt she “didn’t have to have a degree in finance” in order to understand it. Felicia enjoys the transparency we provide and feels that other South Africans should also take steps to entrust their savings to the institution that best suits their needs.

To read more of our valued clients’ stories and reviews, click here.

10X Unit Trust: the easiest way to invest

Other premium 10X unit trust fund options include the 10X Money Market, 10X Moderate Fund, 10X MSCI World Index Feeder Fund, 10X Top 60 SA Equity Index Fund and 10X SA Property Index Fund. Each fund offers a unique mix of assets, and between them have been designed to offer South Africans a cost-effective wealth-building solution, no matter their stage of life.

If you’re interested in finding out more about our services, we recommend contacting one of our highly experienced consultants. Whatever your financial goals, we have a range of discretionary and retirement investment products to suit your needs.

10X Investments is an authorised Financial Services Provider (FSP number 28250). The content herein is provided as general information and is not intended as nor does it constitute tax, legal, investment, or financial advice as defined by the Financial Advisory and Intermediary Services Act, 2002.

10X Fund Managers (RF) (Pty) Ltd is an approved manager of collective investments schemes in securities in terms of Section 42 of the Collective Investments Schemes Control Act, 45 of 2002.

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