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Taiwan’s PSPF returns, assets rise, warns of inflation concern

PSPF
By Hui Ching-hoo   
May 4, 2021

Taiwan’s Public Service Pension Fund (PSPF) posted an investment gain of NT$34.47 billion (US$1.24 billion) in the first quarter, translating into a year-on-year return of 5.35%.

It was a turnaround from the NT$61.3 billion investment loss in the first three months of 2020 amid the global market sell-off at the onset of the coronavirus pandemic, when it suffered a 10.42% year-on-year loss.

The fund’s performance has been improving since the second half of last year as markets rallied in the wake of monetary easing by global central banks, but it warned that concerns about inflation have sparked greater volatility.

The first-quarter investment gain drove the fund’s total assets up to NT$678.29 billion as of March 2021 from NT$640.2 billion at the end of last year.

Around NT$13.97 billion of the gain was from internally-managed portfolios, which account for 51.19% of the PSPF’s total assets, and NT$20.5 billion from outsourced mandates, which make up the rest of the assets, it says in a statement on April 30.

Average investment returns for the in-house portfolios and external mandates were 4.19% and 6.61%, respectively.

“Although the global economy showed signs of recovery in the first quarter with increasing Covid-19 vaccination rates and the US stimulus package, the global capital market has become increasingly volatile due to heightening inflation concern,” the pension fund says.

Huang Jong-tsun, president of the Examination Yuan, which supervises the PSPF, says the fund will closely monitor global market trends, especially the impact of the pandemic and US-China geopolitical tensions.

“PSPF will adjust its asset allocation and investment strategies in a more timely way based on the changing financial market condition and coronavirus development... The fund is aimed at delivering long-term returns for its members,” he says in the statement.

The PSPF is a mandatory defined-benefit scheme for civil servants, teachers and military personnel.