Investing in property has long been considered a cornerstone of wealth building, but not everyone has the capital, time, or expertise to purchase and manage physical real estate. Enter the 10X SA Property Income ETF – a streamlined solution that offers investors exposure to South Africa’s listed property sector through a single, cost-effective investment vehicle.
Disclaimer: I am not a financial advisor. This information is for educational purposes only and should not be considered as financial advice. Always do your own research and consider seeking advice from a qualified financial professional before making any investment decisions.
What is the 10X SA Property Income ETF?
The 10X SA Property Income ETF is an exchange-traded fund that provides investors with diversified exposure to South African Real Estate Investment Trusts (REITs) and listed property companies. Managed by 10X Investments, a company known for its low-cost investment philosophy, this ETF tracks a benchmark of SA-listed property securities traded on the Johannesburg Stock Exchange.
By investing in this ETF, you’re essentially buying a basket of property companies that own and manage various real estate assets, including retail centers, office buildings, industrial warehouses, and residential properties across South Africa.
Key Benefits
Diversification Made Simple
Rather than putting all your eggs in one property basket, the ETF spreads your investment across multiple property companies and sectors. This diversification helps reduce the risk associated with any single property or property type underperforming.
Income Generation
One of the most attractive features of property ETFs is their focus on income distribution. SA REITs are required by law to distribute at least 75% of their taxable income to shareholders, making this ETF particularly appealing for income-seeking investors. These regular distributions can provide a steady cash flow stream.
Liquidity and Accessibility
Unlike physical property, which can take months to buy or sell, ETF units can be traded on the JSE during market hours. This liquidity means you can enter or exit your position relatively quickly. Additionally, the barrier to entry is low – you don’t need hundreds of thousands of rands to get started.
Cost Efficiency
10X Investments is renowned for its low-fee structure, and this ETF is no exception. Lower fees mean more of your returns stay in your pocket over the long term, which can make a significant difference to your wealth accumulation.
Considerations Before Investing
While the 10X SA Property Income ETF offers numerous advantages, it’s important to understand the risks and considerations:
Market Volatility: Listed property can be volatile, with prices fluctuating based on economic conditions, interest rates, and investor sentiment.
Interest Rate Sensitivity: Property stocks are particularly sensitive to interest rate changes. Rising rates can negatively impact property valuations and increase borrowing costs for property companies.
Economic Exposure: The ETF’s performance is closely tied to South Africa’s economic health, particularly consumer spending and business activity.
Tax Implications: Income distributions from SA REITs are typically taxed as income rather than dividends, which may have different tax implications depending on your circumstances.
Total Invest Cost (TIC) is at 0.48% which is still cheaper than most unit trusts available in South Africa.
Who Should Consider This ETF?
The 10X SA Property Income ETF may be suitable for investors who:
- Seek regular income distributions
- Want exposure to the property sector without the hassles of direct ownership
- Are building a diversified investment portfolio
- Have a medium to long-term investment horizon
- Understand and can tolerate market volatility
Top 10 holdings of 10X SA Property Income Fund
- GROWTHPOINT PROPERTIES LTD – 15%
- NEPI ROCKCASTLE N.V. – 14.7%
- REDEFINE PROPERTIES LIMITED – 13%
- FORTRESS REAL ESTATE INVESTMENTS LIM – 10%
- VUKILE PROPERTY FUND LTD – 9.1%
- RESILIENT REIT LIMITED – 7.4%
- HYPROP INVESTMENTS LTD – 6.6%
- EQUITES PROPERTY FUND LIMITED – 5%
- SIRIUS REAL ESTATE LTD – 3.8%
- ATTACQ LIMITED – 3.7%
Overall the ETF fund exposure is 100% local to South Africa, meaning their are no offshore properties linked to the fund.
The Bottom Line
The 10X SA Property Income ETF represents an accessible, cost-effective way to gain exposure to South Africa’s listed property sector. It combines the income-generating potential of real estate with the convenience and liquidity of stock market investing.
However, like all investments, it should form part of a broader, diversified portfolio aligned with your financial goals, risk tolerance, and investment timeline. Consider consulting with a financial advisor to determine whether this ETF fits your specific investment strategy.
In a market where fees can erode returns and complexity can overwhelm, the 10X SA Property Income ETF offers a straightforward solution for those looking to add South African property exposure to their investment mix.