Chris Eddy, Head of Multi-Asset Funds at 10X Investments, illustrates the intricacies of the 10X Income AMETF, a trailblazing actively managed ETF recently listed on the Johannesburg Stock Exchange (JSE). Designed to deliver both high levels of income and capital stability, the fund invests in a diverse array of fixed and floating rate instruments worldwide.

Key Highlights

  1. Low management fee – At the forefront of the 10X Income AMETF is its commitment to investors through a low management fee of 38 basis points. This cost-effective structure enhances the appeal of the fund, allowing investors to access sophisticated strategies without breaking the bank.
  2. Opportune income environment – Chris Eddy identifies the present market conditions as exceptionally favourable for income generation. Supported by insightful charts illustrating government bond yields and credit spreads, the discussion underscores the unique opportunities available for investors seeking robust returns.
  3. Delivering outcomes with low-risk assets – The heart of the 10X Income AMETF strategy lies in its emphasis on low-risk assets. Chris unveils the fund’s preference for short-dated inflation-linked bonds, an allocation that aims to secure a real yield of 4.8%. The evaluation of nominal bonds based on inflation risk premiums further demonstrate the fund’s commitment to managing elevated fiscal risk.

Navigating market distortions

Chris delves into the intricacies of the local credit market, shedding light on the distortion caused by high government yields. This phenomenon creates a demand-supply imbalance in the South African credit landscape. The video below discusses the risks associated with SA credit and contrasts it with the more rewarding opportunities found in global credit markets, where superior spreads are available for the equivalent credit rating.

Fund positioning for optimal returns

The 10X Income AMETF’s portfolio positioning emerges as a carefully crafted strategy, with a significant 65% allocation to SA government bonds, comprising both inflation-linked and nominal assets. The fund adopts a conservative approach with a maximum duration of three years, a 12% offshore investment, and minimal exposure to SA credit (2%). This positioning aims to deliver a low-risk outcome while maintaining a current yield of approximately 9.9%.*

The 10X Income AMETF stands as a beacon of innovation in the investment landscape, offering a globally diversified, managed income solution. Wrapped in the accessible form of an ETF on the JSE with a low-cost structure, the fund seeks to provide investors with a unique opportunity to navigate the complexities of fixed income markets while aiming for consistent, low-risk returns. The fund is also available as a unit trust.

View the video below where Chris Eddy’s insights provide a comprehensive guide for investors looking to unpack the potential of the 10X Income AMETF.

*Yield as at 30/10/2023. Actual returns may vary.

To learn more about the world of fixed income, click on the link to listen to the latest podcast from Chris Rule, Head of Client Solutions at 10X, titled “The Resurgence of Bonds”.


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