Taiwan's Labour Pension Fund awards $750 million in mandates

Legg Mason's Esemplia, Morgan Stanley Investment Management and Vontobel will each run a $250 million global emerging-market portfolio, the state entity’s first GEM mandates.

By all accounts, government institutions in Asia – traditionally a relatively conservative bunch – are becoming more adventurous in their investment strategies in a bid to boost returns to match growing liabilities. The latest investment mandates awarded by Taiwan’s Labour Pension Fund (LPF) seem to bear out this trend.

After receiving bids in April, the $32.71 billion state entity has decided on the recipients of its first ever global emerging-market (GEM) equity mandates. Two US managers – Morgan Stanley Investment Management and emerging-market boutique Esemplia (part of Legg Mason) – and Zurich-based Vontobel have each scooped a $250 million portfolio with a four-year mandate.

Neither the LPF nor any of the three asset managers would comment on the mandates.

Unlike previous RFPs, which were set with specific performance-related award schedules, the LPF did not specify its fee schedule in its current RFP. The investment target for this batch of GEM mandates is set at 250 basis points above the MSCI Emerging Markets IMI Index (total return, net dividends reinvested, unhedged and measured in US dollars) net of fees and on a rolling three-year basis.

Other requirements included that managers had to have no less than $5 billion worth of institutional or segregated assets under management; any AUM number submitted had to exclude funds sourced from retail origins.

Moreover, LPF assets to be managed were not to exceed 40% of the AUM of a manager's GEM portfolio. And if a manager already had a large book of investments, the LPF wanted an explanation on how that manager would deal with capacity issues.

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