Factor investing has a long and proud history – from Benjamin Graham, through the evolution from CAPM to APT, the body of work by Fama and French, to the present day where various index-based factor strategies have broad-based appeal and adoption with investors through so-called smart beta ETFs.
10X Investments recently announced the proposed amalgamation of its 10X Dividend Aristocrats ETF and 10X Scientific Beta Multi-Factor ETF into its 10X Top 50, so Nerina Visser CFA hosted Christopher Rule, Head of Client Solutions in the latest episode of the ETFinvestor to ask the question “Is factor investing dead?”
Spoiler Alert – the answer is “no”, but have a listen to the podcast to understand why it is not, and what investors are required to do to vote in the ballot before the end of June.
At 10X, we continuously review our fund range to ensure that we offer investors superior investments in the most efficient way possible. At this time, we are of the opinion that investors in the 10X SA DivTrax ETF & the 10X Scientific Beta Multi Factor ETF will be better served by amalgamating these 2 funds into the much larger and more efficient: 10X Top 50 ETF
Benefits to investors:
- Combined Scale and Efficiency: Merging the funds will increase scale and efficiency, enable more focused decision-making and execution, and has the potential to generate improved returns for investors over the long term.
- Cost Savings: Investors will benefit from a 50% reduction in management fees excl. VAT as fees are reduced from 0.40% in the Transferring Portfolio to 0.20% in the Targeted Portfolio. A larger fund size can lead to reduced expenses as a percentage of assets under management. This translates into lower expense ratios for investors, potentially improving the overall net returns of the amalgamated fund.
- Access to award-winning 10X Top50 ETF: Investors will continue to benefit from the long-term performance of SA equities. The 10X Top50 ETF provides exposure to the 50 largest companies on the JSE Limited by float-adjusted market cap and maximises diversification by capping single stock weights at 10% (applied at the quarterly rebalance). The fund is at scale with over R1.5 billion in assets and has won numerous SALTA awards for efficient index tracking since its launch in 2015.
- No CGT: The Proposed Amalgamation will be a capital gains tax (CGT) roll-over event for investors choosing to remain invested, so no CGT is payable upon amalgamation.
Please don’t hesitate to reach out to us with any further queries or concerns.
Click here for ballot form – 10X DivTrax ETF
Click here for ballot form – 10X Scientific Beta Multi Factor ETF
For full details around the rationale for the changes and the respective timelines, please read the SENS announcements for each below.
https://senspdf.jse.co.za/documents/SENS_20240520_S489608.pdf
https://senspdf.jse.co.za/documents/SENS_20240520_S489605.pdf