The Bureau of Labor Funds in Taipei announced negative returns across all its funds for 2022, despite shifting allocations to debt and equity securities from bank deposits in response to market conditions, according to its latest annual report.
The BLF, which oversees eight pension and annuity funds, had 5.5 trillion New Taiwan dollars ($179 billion) in total assets under management as of Dec. 31, up from 5.1 trillion New Taiwan dollars the year before.
However, annual returns fell to -6.68% in 2022, compared with 9.67% in 2021.
"To curb rapidly rising inflation, major countries around the world have adopted more aggressive tightening monetary policies in response, adding to the potential for slower economic growth or even recession, resulting in a rare simultaneous decline in global investment markets such as stocks, bonds and alternative investments," Su Yu-Ching, director general of BLF, wrote in the report.
"In the face of the negative environment in the financial markets, the Bureau is adopting a cautious approach to the situation," she wrote.
She added that in response to the fluctuations in global financial markets, the bureau established a "strategic asset allocation and investment adjustment mechanism with reference to the practices of international asset management institutions," she said.
For instance, the Labor Pension Fund, which makes up the bulk of the BLF's total assets with 3.6 trillion New Taiwan dollars, reduced allocations in bank deposits to 15.17% from 19.75% the year prior. Allocations to domestic debt and equity securities were increased to 8.46% and 20.66%, from 7.96% and 20.19%, respectively.
Allocations to foreign debt and equity securities were also raised to 17.69% from 16.64% for debt, and 24.91% from 23.64% for equity.
More of the portfolio was also externally managed in 2022, with 59.1% outsourced in 2022, up from 58.1% in 2021.
BLF did not immediately respond to requests for comment.
Year-to-date, the BLF has seen positive returns, posting 2.6% cumulative returns for the year in January, 2% in February, and 3.8% in March.