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Taiwan’s BLF plans NT$70 billion local ESG equity mandate

BLF
By Hui Ching-hoo   
October 6, 2022

Taiwan’s Bureau of Labor Funds (BLF) plans to hire seven asset managers for a NT$70 billion (US$2.21 billion) domestic absolute return equity mandate, which will be open for bidding by December.

Investments will focus primarily on locally-listed companies that are compliant with environmental, social and governance standards.

The BLF is targeting a return that is equivalent to the five-year average return of Taiwan’s benchmark stock index plus 250 basis points.

“BLF has been promoting sustainable investments for many years. It considers both environmental and corporate governance factors, and profitability as major investment criteria [for its mandates],” the pension fund supervisor says in a request for proposal on October 3.

It says the tender will be opened in the current quarter, without pinpointing a date.

The BLF manages eight pension and annuity funds, with NT$5.48 trillion of assets under management as of August 2022.

It hasn’t outsourced investments actively amid rising market volatility as global interest central banks raise interest rates to fight inflation. This is only its second tender of 2022, and the first for local investment.

Deputy Director General Liu Li-ju said in an interview with Asia Asset Management in July that the BLF is shoring up its risk management capabilities and adopting a prudent asset allocation approach, and that it will not be aggressive in introducing new alternative strategies.

“We do not cease our investment activities even during the current market downward cycle, but we need to be sufficiently prepared in data research and analysis before making investment decisions,” she said.

Funding for the new tender will be split equally among the seven winning bidders, with NT$7 billion managed for the Labor Pension Fund, Taiwan’s largest defined-contribution plan, and NT$3 billion for the Labor Retirement Fund, the largest defined-benefit plan.

The BLF’s first tender this year was in March, for a global climate change mandate. The winning bidders were HSBC Global Asset Management, Legal & General Investment Management, Schroder Investment Management, Morgan Stanley Investment Management and Wellington Management Company.

The BLF’s last tender for domestic investments was in September 2021, a NT$48 billion corporate social responsibility domestic equity mandate that was won by Cathay Securities Investment Trust Co, Fubon Asset Management Co, First Securities Investment Trust Co, Nomura Asset Management Taiwan, Allianz Global Investors Taiwan and PGIM Securities Investment Trust Enterprise.