Taiwan fund manages large offshore search

The NT$700 billion ($21 billion) Taiwanese Labor Pension Fund is tendering for Asia ex-Japan and global equities mandates, with a combined asset value of $1.2 billion, for its new and old pension funds in what is the first overseas discretionary search for this year.

For the new system the Labor Pension Fund Supervisory Committee is looking for three Asia-Pacific ex-Japan equity managers, which will each receive $200 million. It is also tendering for two global passive equities managers, which also receive $200 million each.

An Asia-Pacific ex-Japan equity mandate worth $200 million is also being sought for the old pension fund, which is a defined benefit fund.

The committee has reasonably strict investment criteria and does not allow leverage to be used by managers.

The New Labor Pension Fund, a defined contribution plan established in 2005, outsources 47 per cent of its assets, with 22 per cent to domestic equities managers, and 25 per cent in foreign equities and debt securities.

The Labor Pension Fund Supervisory Committee, established in July 2007 to oversee unified management of the pension funds of the old system under the Labor Standards Act and this new retirement fund system, is also engaging in discussion to adjust asset allocation dynamically and establish a simulated management model to assist in investment decision making and improve fund performance.

To the end of 2008 the overall fund return was a modest -8.48 per cent.

At the time of establishment the committee indicated 80 per cent of pension fund investment would go into fixed deposits and the purchase of bills and bonds, 15 per cent will be invested in the domestic stock market, and 5 per cent will go into overseas stock markets.