Taiwan's BLI hands mandates to Pimco, Standish and Wellington

The Bureau of Labour Insurance continues to outsource its overseas investments with three new mandates totalling $600 million.

As the fund manager-vetting process continues at the Public Pension Service Fund of Taiwan, the Bureau of Labour Insurance (BLI) in late December announced three recipients of another batch of hotly contested overseas mandates.

Following a request for proposals issued in October, the $6.5 billion fund for labour insurance has chosen US asset managers Pimco, Standish Mellon and Wellington to run its latest global fixed-income mandates. Each one is for $200 million and -- unusually for a Taiwanese institution -- for a five-year term; three years tends to be more common.

Pimco and Wellington are not newcomers to the institutional outsourcing scene in Taiwan. The country's 'big four' institutions -- the BLI, Labour Pension Fund, Public Service Pension Fund and Taiwan Post -- rely heavily on the two managers' fixed-income expertise. But the emergence of Standish, a fixed-income boutique manager in the BNY Mellon group, in the final list of the current mandates, marks an encouraging step for the firm in the Asian institutional market.

The BLI has set a performance target of 80 basis points over the benchmark -- the Barclays Capital Global Aggregate Bond Index -- net of fees and taxes and without leverage, and will accept a tracking error of up to 4% a year.

Other than that, the three managers will be given a relatively free hand to invest the capital. The BLI will happily buy almost anything from government, supranational, financial and corporate bonds to securitised assets, with a credit rating of at least BBB-.

With these mandates, the BLI will raise its allocation to overseas fixed-income assets from 13% to 20%.

Meanwhile, in the first quarter of 2010, the BLI will fund another batch of mandates worth NT$20 billion ($6.26 billion) for domestic equity investments. It plans to give each of five managers a three-year mandate.

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