Taiwan’s labour funds see year-to-date gains boosted by global market rallies

Taiwan’s Bureau of Labor Funds reported a surge, attributing gains to global market rallies. Labour funds’ cumulative gains reached NT$494.96 billion in Q1, with strong performances in overseas investments.

Taiwan’s Bureau of Labor Funds reported a significant surge in March, bolstering the gains of its managed labour funds by NT$242.21 billion (US$7.44 billion). According to the bureau’s statement on Wednesday, the funds’ cumulative gains, reflecting the growth in assets within their portfolios and investment returns, amounted to NT$494.96 billion for the first quarter of the year, marking an increase of NT$242.21 billion since the end of February.

The bureau attributed this surge to the announcement by the U.S. Federal Reserve, made following a policymaking meeting in March, hinting at the possibility of three interest rate cuts throughout the year. This announcement sent global financial markets soaring, contributing to the substantial gains observed in the labour funds managed by the bureau.

The MSCI World Index saw a notable increase of 3.14 per cent in March, pushing its first-quarter gains to 8.20 per cent. Similarly, the MSCI Emerging Markets experienced growth of 2.12 per cent, accumulating gains of 2.17 per cent over the same period.

In Taiwan, the benchmark Taiex, representing the Taiwan Stock Exchange’s weighted index, surged approximately 7 per cent in March, despite a surprise rate hike of 12.5 basis points by the local central bank. For the first quarter, Taiex recorded an impressive surge of 13.18 per cent.

The Bureau of Labor Funds attributed this strong performance in the local market to optimism regarding Taiwan’s economic trajectory.

As per the bureau’s data, 57.63 per cent of the labour funds’ investments were allocated overseas, while the remaining 42.37 per cent were invested domestically.

As of the end of March, the combined value of the funds managed by the bureau, including the Labor Pension Fund, the Labor Retirement Fund, the Labor Insurance Fund, the Employment Insurance Fund and the Arrear Wage Payment Fund, reached NT$6.42 trillion by the end of March. This represented a notable rate of return of 8.30 per cent in the first quarter of the year.

The newly established Labor Pension Fund, initiated in 2015, boasted the highest asset value among the funds, totaling NT$4.18 trillion by the end of March. Its rate of return for the same period stood at 8.22 per cent.

The long-standing Labor Retirement Fund, in existence since 1984, held approximately NT$1.02 trillion in assets at the end of March, achieving an impressive rate of return of 10.11 per cent.

Additionally, the Bureau of Public Service Pension Fund disclosed on Wednesday that the Public Service Pension Fund it manages garnered gains of NT$71.92 billion in the first quarter of 2024, reflecting a rate of return of 8.57 per cent. Notably, in March alone, the fund recorded gains of NT$32.29 billion, benefiting from the upward momentum in global market rallies.