Taiwan’s LIF introduces new target rate of return

30 September 2013   Category: News, Global, Taiwan   By Asia Asset Management

Taiwan’s Labor Insurance Fund (LIF) has decided to employ a more flexible measure to assess its outsourced asset managers’ performances, changing the target rate of return for its absolute return mandate from a fixed target return of 7% to a floating target return, according to Commercial Times
 
The floating target is based on the average of three-year dividend yield in the market. 
 
An official from the Bureau of Labor Insurance told local media that the initiative will encourage the pension fund’s outsourced asset managers to invest in quality companies with stable dividend pay-outs rather than pursue short-term gains.  
 
LIF is the first pension fund in Taiwan to adopt a floating target rate of return for its absolute return mandate. 
 
The rate of return for LIF’s absolute return mandate is 7% per annum. The scheme will not award bonuses to outsourced asset managers if they fail to meet their target returns.