Taiwanese State Pension to double alternatives exposure this year

Taiwan’s Bureau of Labor Funds furthers its alternatives exposure boost with a planned issuance of over $2bn in mandates for infrastructure investments in 2015 H1.

Taiwan’s Bureau of Labor Funds (BLF), a state pension instituted last year to oversee $92 billion in insurance, retirement and pension schemes through four of the country’s pre-existing labour pension and insurance funds, announced yesterday its intention to issue for first half of 2015 mandates of $2 billion to three of its funds, acting on its plans to double current portfolio exposure by end of 2015.

The National Pension Insurance Fund (NPIF), the Labour Insurance Fund (LIF), and the Labour Pension Fund (LPF) are to follow the lead of BLF’s old scheme, the Labour Retirement Fund (LRF) which received two mandates worth $200 million for real estate and infrastructure securities in April last year.

The institution’s deputy director general, Liu Li-Ju explained that the move towards infrastructure and real estate allocations and away from equities reflected a will to secure increased protection of BLF’s investment portfolio from market volatility.

By end of Q$ 2014, BLF had increased by 0.6 percent its portfolio allocations to alternatives compared to last April’s ratio of 2.3 percent. It aims to double the 2.9 percent by the end of this year.

BLF concurrently plans to raise its overseas equity allocation, potentially above its overseas bond exposure, this year. The reason mentioned by deputy director general Li-Ju Liu is that her team expects risky assets to benefit from gradual global economy recovery.

The state pension supervisor announced generated returns for all seven funds it directly and indirectly manages for 2014. LPF, LRF, LIF, NPIF, the Employment Insurance Fund, the Overdue Wages Payment Fund, the Occupational Incidents Protection Fund spawning 6.38 percent, 7.19 percent, 5.61 percent, 6.03 percent, 1.07 percent, 1.8 percent and 0.89 percent respectively.