The Bureau of Labour Insurance (BLI) in Taiwan is seeking three investment managers for its latest batch of mandates -- three $200 million global fixed-income portfolios.
The recent craze for high-yield or corporate bond strategies will not apply in this case, as the portfolios will be benchmarked to the Barclays Capital Global Aggregate Index in US dollars on an unhedged basis. Maximum tracking error is set to 4% a year, and the annual performance target is 80 basis points above benchmark, net of all fees and taxes.
Acceptable investments include public bonds of central governments, government agencies, supranational institutions, municipals, debentures issued or guaranteed by banks, corporate, convertibles and non-equity asset securitisation products. Recognised instruments for liquidity management include treasury bills, negotiable certificates of deposit, bank deposits, commercial paper and money-market funds.
The lowest acceptable long-term credit rating of the instruments held in the portfolios is BBB- from Standard & Poor's or Fitch or Baa3 from Moody's. Investment in a single issue of government bonds, corporate and superannuation debt or securitised instruments should be no higher than 10% of net asset value. Exposure to mainland China issues, specifically, is capped at 2%.
The BLI stresses to managers that it will not accept leverage in its portfolios. Derivatives are allowed for return enhancement or hedging, but should be used in accordance to the BLI's regulations.
Bidders are encouraged to submit their investment proposals by November 9.
This represents the BLI's third batch of outsourced overseas mandates. Bidders are expected to be running at least $25 billion of institutional client assets. They must have a track record of at least three years. All valuations used in the submitted proposals should be dated August 31.