Global weakness erodes labor funds' year-to-date gains

Taipei, June 3 (CNA) The weakness of global financial markets cut the gains of labor funds managed by Taiwan's Bureau of Labor Funds by NT$38.91 billion (US$1.20 billion) in April, the bureau said Monday.

Data compiled by the bureau showed the funds' accumulated gains, which reflect increases (or decreases) in the value of assets in the funds' portfolios and income from investments, totaled NT$456.05 billion in the first four months of this year, down NT$38.91 billion from the end of March.

The bureau said global financial markets felt the pinch resulting from disappointing economic data in the United States in April, referring to a 1.6 percent increase in U.S. GDP in the first quarter.

In addition, escalating tensions in the Middle East following a strike by Iran against Israel dealt another blow to most financial markets around the world in the month, the bureau said.

In April, the MSCI World Index fell 3.30 percent, while its accumulated gains for the first four months of the year hit 4.36 percent. In addition, the Barclay Global Aggregate Bond Index lost 2.52 percent in April with its aggregate losses hitting 4.55 percent in the four-month period.

Meanwhile, the MSCI Emerging markets grew 0.67 percent, with aggregate gains hitting 2.85 percent, while in Taiwan, the benchmark Taiex, the weighted index on the Taiwan Stock Exchange, rose only 0.50 percent, with accumulated gains for the four months reaching 13.75 percent.

According to the bureau, 57.79 percent of investments made by the labor funds were overseas and the remaining 42.21 percent was invested domestically.

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, totaled NT$6.51 trillion as of the end of April.

Based on that value, the gains represented a rate of return of 7.57 percent in the first four months of this year, according to the bureau.

The value of assets in the new Labor Pension Fund, launched in 2015, totaled NT$4.27 trillion at the end of April, making it the largest fund, and its rate of return this year to the end of April was 7.56 percent, the bureau said.

The Labor Retirement Fund, which has been in place since 1984, had about NT$1.04 trillion in assets as of the end of April, with a rate of return of 8.82 percent, the bureau added.

Liu Li-ju (劉麗茹), deputy director of the bureau, said it was the first monthly losses incurred by labor funds managed by the bureau so far this year, but the losses could be made up in May, when financial markets worldwide reported positive returns.

However, Liu said the labor funds still reported an average return of 6.06 percent over the past more than 10 years, indicating a stable long-term performance.

In the second half of this year, Liu said volatility on the global financial markets could be caused by non-economic factors, in particular national elections in several major countries, including the presidential vote in the United States.

The bureau will continue to diversify its investments in a bid to minimize the impact of political uncertainties, she said.