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As 10X Investments launched an offer to customers opening a new policy in June that they won’t pay 10X fees until January 2020, Chris Eddy, the company’s Head of Investments, reminded investors that the fees they paid were one of the biggest factors under their control.
“These are uncertain times with the election, delays over the appointment of cabinet and volatility in the market,” he said. “Investors should concentrate their efforts on the things that are in their control, like fees.”
The offer of paying no fees until January 2020 applies to anyone investing in a new 10X retirement product in June, whether they are transferring an existing fund to 10X or starting a new one.
“It is not often in South Africa that you won’t have to pay investment fees for any period of time. This is a rare opportunity for investors to hold on to a greater portion of the investment return,” Eddy added.
“Regardless what happens in the market in the next six months, customers who take advantage of any fee-free months will automatically see a better return.”
The disruptive investment company has run similar offers before and customers who have taken advantage of fee-free offers have benefited from more than the fee reduction because 10X has consistently outperformed the average fund manager in South Africa.
The first fee-free offer was run to mark 10X’s 10th birthday last year, an event that turned into a double celebration when the company recorded industry-beating performance for its first decade. 10X’s annualised return over its first 10 years was 11.3%, 0.8% above the large fund manager average in the 2017 Alexander Forbes Large Manager Watch (LMW), Global, Best Investment View Category. This outperformance was before any fee differential was taken into account.
10X charges less than 1% before VAT in fees, which is 2% less than the estimated industry average for individual investors, which comprises advice, administration and investment fees. The additional 2%, which accrues to investors’ accounts and compounds over years, makes a huge difference in the long run.
“We’ve consistently beaten the country’s large manager average. When you factor in the average 2% in fees that we save our clients those returns look even better,” said Eddy. “The difference compounded over a 40-year saving period really is the difference between a dignified retirement and a dismal one.”
“In an environment of heightened uncertainty, no one can realistically predict what the market will return over the next year,” he says. “The only thing that is guaranteed with any certainty is the fees that you pay.”
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