Hilan Berger, 10X Investments’ Head of Institutional Business Development, must often respond to outlandish claims from asset managers who will, it seems, do anything to hang on to clients who are considering a move to 10X. Below is the content of one such response (copied here verbatim except for the removal of text that would identify the offending party). The image it brings to mind is a battle with a wily but wounded old fox.
Hilan is writing to Client X regarding a mail from Company Y, which has put together a defence of its performance in an attempt to persuade the client not to move their business to 10X despite compelling reasons to do so.
“I’ve seen some industry tactics previously, but this looks like we’re plumbing new lows. The data presented to you is designed to confuse/obfuscate.
For one thing, 15-year returns are being compared to 10-year returns. That’s the equivalent of comparing a 15-year old’s aptitude vs a 10-year old’s, or a 10,000m runner’s best time against a 15,000m runner’s best time (it’s not like-for-like), so this is a meaningless exercise to undertake (unless it produces the numbers you want!)
The three funds referred to have inception dates (ie were created) less than five years ago. What Y has done here is looked backwards. This is highly inappropriate (and misleading). Our funds have a genuine 10-year track record (ie were started in December 2007 and client funds were invested into our funds then) and our returns are returns based on physical/real investments (not theoretical portfolio holdings, looking backwards).
As I’m sure you’ll agree, it’s easy to create something today which would have produced stellar results in the past. This is of no value as hindsight is 20/20.
Y is comparing net returns (returns after fees) vs gross returns (returns before fees) – apples vs pears being compared here. Our analysis showed net returns vs net returns (apples vs apples).
Our proposal to your company showed our best (and only) investment view (the portfolio you would always be invested in with 10X) vs what you were invested in with Y. This is not a passive vs active investment management comparison; it’s a comparison of whether or not your fund did well given the option selected.
What large retirement fund providers often do is invest you in a poor but expensive option (as your company has been) and then show you one of their other 20-30 portfolios which have done well when you question the poor performance of the funds you’re invested in.
The problem is you were not invested in those ‘winning’ portfolios – so it lands up being cold comfort to you. We clearly demonstrated that you would have done significantly better with 10X had you been our client (there are no competing portfolios at 10X – we only have 1 solution).
10X does restrict our clients (in terms of investment style) by only offering passive investments. This is 100% by design – we know what works best for members and what achieves the best results (on a probability basis). We do not gamble with our client’s money and try pick ‘winning’ active managers (who can, theoretically, outperform passive, but simply have not over lengthy periods of time – the data is unequivocal). S&P’s stats about 89% of SA equity active managers underperforming their benchmark is a very telling stat. https://us.spindices.com/spiva/#/reports/regions.”
The average fee charged by the 10X corporate retirement fund is 0.6%, less than a third of the industry average of 2%.
Reducing the fees on your corporate retirement fund could mean as much as 30% more income in retirement for members.
Contact 10X Investments to do a free, no obligation fee analysis and comparison with your current fund.
