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Taiwan’s BLF funds incur loss on US rate hike fears, Covid-19

By Hui Ching-hoo   
March 3, 2022

Taiwan pension funds supervised by the Bureau of Labor Funds (BLF) incurred an investment loss of NT$118.1 billion (US$4.2 billion) in January, dragged down by market volatility triggered by concerns about US rate hikes, the coronavirus pandemic, supply chain woes and geopolitical risks.

That was a turnaround from the NT$29.55 billion investment gain a year ago. The eight pension and annuity funds registered an average loss of 2.2% in January versus a 0.61% gain 12 months ago.

The US Federal Reserve is widely expected to begin raising interest rates as soon as this month to rein in rising inflation.

“The US Fed is set to raise interest rate with the mounting inflationary pressure. This, coupled with the ongoing Covid-19 impact, as well as the worsening of global supply chain and geopolitical risks, is deteriorating global market volatility,” BLF says in a monthly report on March 1.

The pension supervisor adds that its funds will stay focused on dynamic asset rebalancing to stave off increasing market volatility.

Four of the funds reported losses and the other four managed to eke out gains.

The Labor Retirement Fund, Taiwan’s largest defined-benefit retirement scheme, was the worst performer with an investment loss of 2.59%. The second worst was the Labor Pension Fund, the largest defined-contribution scheme, with a 2.33% loss.

The eight funds had NT$5.61 trillion of assets under management as of January 31, up from NT$5.03 trillion a year ago.