Taiwan's BLF to issue $2.4bn in alternative mandates

Taiwan’s Bureau of Labour Funds (BLF) is seeking managers for a total of $2.4 billion in global alternative asset strategies across 12 segregated mandates – four for real estate securities and eight for infrastructure securities.

The state institution is continuing to diversify away from traditional assets, having allocated 2.9% of its NT$2.89 trillion ($92 billion) portfolio to alternatives at the end of 2014. It now aims to double such exposure to 6% this year.

The new five-year mandates are planned for three of BLF’s sub-entities: the NT$627.1 billion Labour Insurance Fund (LIF), the NT$192.5 billion National Pension Insurance Fund (NPIF), and the NT$1.32 trillion Labour Pension Fund (new scheme) (LPF).

The real estate and infrastructure portfolios will total $600 million and $1.8 billion respectively. LIP will allocate $400 million to real estate portfolios and $400 million to infrastructure portfolios; NPIF will allocate $200 million to real estate; the LPF (new scheme) will allocate $1.4 billion to infrastructure. By adding such exposure, BLF will boost its alternative assets to $5.1billion.

The target return is based on the FTSE EPRA/NAREIT developed index plus 200 basis points. The infrastructure mandates’ target return is the Dow Jones Brookfield global infrastructure index plus 200 basis points.

Each mandate must have a track record of at least three years, and each manager must manage at least $5 billion in assets as of December 31, 2014. Managers must have a branch institution, operation venue or service team in Taiwan.

All the requirements for managers are set out in detail on BLF’s website, including conditions, selection criteria and details of how to apply. Submissions must be made by March 31.

The BLF issued a total of $4.4 billion in mandates for global equity index strategies and enhanced sovereign credit portfolios in January. The managers for these are still in the process of selection. The BLF also plans to seek domestic absolute-return mandates of NT$30 billion for LPF and Labour Retirement Fund (old scheme) (LRF) separately this year, as reported.

BLF now supervises six sub-entities: LPF, LRF, LIF, the Employment Insurance Fund, the Overdue Wages Payment Fund, and the Occupational Incidents Protection Fund, which generated 6.38%, 7.19%, 5.16%, 1.07%, 1.8% and 0.89% respectively. It also manages the NPIF, which generated an investment return of 6.05% last year.