Capital Growth

Global Markets & Manager Selection

Deresh Lawangee
Alpha Retirement Investment Consulting
Lusaka — 26 March 2026

We Are Measuring the Wrong Thing

What the industry measures

Did the fund beat CPI+6%?
What quartile are we in?
How do we rank against peers?

No member retires on a ranking.

What actually matters

Will this member replace 70% of their working income at retirement?

The Income Replacement Ratio connects investment strategy to human outcomes. Everything flows from this reframe.

30%

Average IRR across Southern African pension funds.
Achievable with full preservation: 80%. The gap is not performance — it is governance, preservation, and fees.

Why Global Markets Matter
for African Pension Funds

Three structural reasons your fund needs global exposure

The Case for Global Allocation

1. Fiduciary Duty

100% domestic exposure = concentrated currency, sovereign, and cycle risk. Diversification is not speculation — it is risk management.

2. Opportunity Set

The JSE is <1% of global market cap. The LuSE is a fraction of that. Your members deserve access to the full investable universe.

3. Regulation is Catching Up

SA permits 45% offshore. PIA is evolving similarly. The direction is toward greater global allocation — not less.

<1%

The JSE's share of global market capitalisation.
The world's structural winners are not all listed on your local exchange.

Active or Passive? The Coke vs House Test

The Coke

Would you send your 10-year-old to buy a can of Coke?
Yes. Standardised product. No information asymmetry. No hidden defects.

= Passive investing in efficient markets (US large cap, global index)

The House

Would you send them to buy a R600,000 house?
No. High variation. Sellers conceal problems. Location is everything.

= Active investing in less efficient markets (EM, Africa, SA mid-cap)

African markets are houses. ABIL, Steinhoff, MTN — houses disguised as Cokes in the index. The LuSE has even less coverage and liquidity. Pure passive is insufficient.

Component	Allocation	Where
Core (60–70%)	Passive / indexed	Efficient markets — US, global developed
Satellite (30–40%)	Active specialist	Less efficient — EM, Africa, alternatives

Manager Selection
is a Governance Process

Not a performance-chasing exercise

Seven Due Diligence Criteria

Does this manager increase the probability that members will achieve adequate retirement income?

#	Criterion	The Real Question
1	Process Integrity	Can you explain this to your board without jargon?
2	Repeatability	Was performance luck, leverage, or genuine edge?
3	Capacity Discipline	Are they growing AUM at the expense of returns?
4	Alignment of Interest	Does the PM have personal capital in the fund?
5	Fee Fairness	What is the compounding cost over 30 years?
6	Transformation	Is ownership genuine or window-dressing?
7	Governance Culture	How do they communicate losses?

Non-negotiable: No appointment with a red flag on Process Integrity, Alignment of Interest, or Governance Culture — regardless of performance.

Fee Drag — The Silent Killer

Analogy

Fees are like high cholesterol. You cannot feel them. They do not announce themselves. But over 20–30 years, they silently erode your members' retirement outcomes.

Illustrative: R1,000,000 invested at 8% gross return over 30 years. Fee difference compounded annually.

For global mandates: the drag is often worse — platform fee + manager fee + currency hedge cost + admin wrapper. Look through to the all-in TER.

The Cultural Iceberg

When a global manager flies to Lusaka and gives you a beautiful pitch deck:

Above the Waterline

Policies. Stated process. Performance track record. Credentials. Marketing materials.

Below the Waterline

How decisions get made under stress. Internal conflicts. CIO's informal veto. Herding behaviour. What happens when the thesis fails.

The marketing version is not the process.

The question that reveals everything:

"Tell me about a decision that went wrong and how you responded."

That answer tells you more than any pitch deck.

Red flag: "We have a consistent and repeatable process." In complex adaptive markets, continuous improvement wins. Consistency loses.

Technology as the Equaliser

The same institutional-grade analytics that SA pension funds use — accessible from Lusaka.

Meridian Survey Tool

683 portfolios benchmarked across SA manager universe
13 analytical views (scatter, rolling, ridgeline, fingerprint...)
Sunburst portfolio selector with drill-down
Any browser, any device, no installation

meridian-survey.pages.dev

Meridian Report Builder

D3.js interactive reports — 7 chart sections
CPI+ tiered architecture, Reg 28 compliant
PDF export for trustee distribution
AI video reports with presenter commentary

meridian-report-builder.pages.dev

683

Portfolios in the Meridian universe. Every manager. Every asset class.
Open it on your phone now: meridian-survey.pages.dev

"The tools exist. The frameworks exist.
The question for every pension fund in this room is not
whether you can afford institutional-grade investment governance.

The question is whether your members
can afford for you not to have it."

Deresh Lawangee • Alpha Retirement Investment Consulting
lawangeed@alpharetirement.co.za • meridian-survey.pages.dev