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Taiwan's Bureau of Labor Funds, launched in February to consolidate oversight of six public funds with combined assets of US$84 billion, is looking to alternatives strategies as key drivers in the bureau's efforts to diversify its investment portfolio.
But BLF executives say they will maintain a cautious approach in stepping onto that alternatives path, with high hurdles for transparency and liquidity ruling out a full embrace of the endowment model anytime soon.
Hedge funds and private equity might be considered in the long run, but more liquid, transparent assets will be considered first, said Chao-Hsi Huang, director-general of the BLF, in a recent interview. With that in mind, "we chose to make our initial investments in real estate investment trusts and (listed) infrastructure," said Mr. Huang.
The push into alternatives was started in 2012 by the BLF's predecessor administrative arms. In March of that year, the Labor Pension Fund, the "new" defined contribution plan launched by the government in 2005, awarded US$1.55 billion in global REIT mandates to three overseas managers. As of Sept. 30, the value of those mandates had grown to US$1.76 billion, with Atlanta-based Invesco Ltd. managing $682.5 million; New York-based Cohen & Steers Inc., $616.8 million; and London-based EII Capital Management Inc., $465.4 million.
Smaller global REIT and global infrastructure mandates have been awarded more recently.
As previously reported, those asset segments will remain the focus of RFPs due to be issued early next year, that should lift the weight of alternatives in the BLF's NT$2.572 trillion (US$84.3 billion) investment portfolio to 6% by the end of 2015 from less than 2.5%...