Taiwanese pension funds supervised by the Bureau of Labor Funds (BLF) posted a 6.59% investment return for the first half of 2021 - an improvement from the first quarter, but well below the benchmark index.

In comparison, BLF posted investment gains of NT$184.9 billion ($6.65 billion) in the first quarter of the year, translating into a return of 4.12%, which indicated improved performance.

However, the returns for the first half of the year fall short of Taiwan’s benchmark stock index that rose more than 20%.

Donna Chen,
Keystone Intelligence

“Asset allocation is the key to the fund performance. In addition, the Taiwanese government should kick off the member choice platform by allowing the pensioners to choose the type of investment according to their different spectrum of risk/return appetite,” Donna Chen, president from Keystone Intelligence, told AsianInvestor.

She believes such initiatives could ease the performance pressure and financing burden from the government pension fund in Taiwan.

The results showed that the funds managed a total of NT4.9 trillion ($175.3 billion) as of end-June.

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Liu Li-ju, deputy director general of the Bureau of Labor Funds (BLF), told AsianInvestor in June that the pension fund is taking a prudent approach and will slow down its process of appointing new asset managers following its bribery scandal last November, where a former domestic division head was revealed to have manipulated stock prices with pension money.

Three local investment companies Fuh-Hwa, Uni-President and Capital were found to be linked to the scandal and restricted from participating in new domestic mandate bids for the next five years. 

“The competition is now less fierce for domestic players as there are only 10 players,” Chen said.

BLF had in February told AsianInvestor that it still plans to invite bids for a domestic investment mandate worth at least NT$40 billion and possibly more than one offshore mandate worth up to $3 billion this year. A spokeswoman confirmed with the media in late June that this plan is still in the works and unchanged.

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In October last year, BLF invited bids for two overseas mandates — a $1.64 billion global infrastructure securities mandate and a $2.3 billion global multi-asset portfolio, both adopting active strategies. It announced the appointment of selected managers in March, which are the only mandates it has so far handed out this year.

BLF in 2020 announced five mandates, totalling $9.7 billion, of which $6.24 billion were for offshore investments.

 

Source: BLF