Taiwanese pension funds select managers for $3bn climate infrastructure mandate
Five managers have been allocated total of $600m each from the Labor Pension Fund, Labor Insurance Fund and the National Pension Insurance Fund
Taiwan’s Bureau of Labor Funds (BLF) has released the results for a $3bn climate transition infrastructure passive investment mandate.
Amundi Asset Management, BNP Paribas Asset Management (Europe), Geode Capital Management, Northern Trust Asset Management (Australia) and State Street Global Advisors (Singapore) have been entrusted with $600m each.
The mandates, awarded after a multi-stage selection process, have a term of five years.
NZI Transition and Climate Investment Conference | 22 October | London | Register here
Each manager will be allocated $400m from the Labor Pension Fund alongside $100m each from the Labor Insurance Fund and the National Pension Insurance Fund.
The BLF announced the search for managers in March this year. The focus of the passive investment mandate was listed infrastructure companies with exposure to the energy transition.
The FTSE Global Core Infrastructure TPI Climate Transition (ex-China) index was chosen as the benchmark. In a statement, the BLF said this was intended to target companies with ‘forward-looking climate transition management capabilities’.
Mandate design
The BLF, established under Taiwan’s Ministry of Labor, is responsible for managing Taiwan’s public pension funds. Speaking with Net Zero Investor, BLF’s director general Yu-Ching Su said the mandate was designed to reflect specific investment objectives.
“By combining the stable income potential of listed infrastructure with long-term structural trends such as the energy transition and rising electricity demand, the mandate is expected to enhance portfolio diversification, strengthen the funds’ investment resilience and further implement the Bureau’s sustainable investment principles”, she explained.
Su says the BLF’s interest in listed climate transition infrastructure is driven by three core factors: growth expectations, long-term investment outlook and a balance between returns and sustainability.
Even if economic conditions change, she reckons, demand for transition infrastructure assets is stable – providing the BLF with portfolio resilience.
Su points out that the mandate not only builds on the BLF’s existing asset allocation in alternatives but also extends it to the listed infrastructure market.
Additionally, the choice to opt for passive investment strategies was deliberate. “The main benefits are cost efficiency, broad diversification and the ability to complement our existing active infrastructure strategies”, Su says.
Manager selection
The BLF’s evaluation committee, according to Su, assesses managers based on ‘organizational capabilities, investment expertise, investment processes, risk management, internal controls, service quality and the implementation of sustainable investing’.
The mandate’s focus on passive investing also determined what the BLF was looking for. “For this passive mandate, technical implementation capability is especially important”, Su noted.
That implementation ability meant BLF would consider the ability of the manager to track the benchmark and manage tracking errors. “We will also consider expertise and experience in portfolio construction, trade execution, index rebalancing, liquidity management and cost control”, she added.
The manager’s experience in climate, transition and infrastructure investing was also part of the BLF’s calculus.
Capital deployment into the mandates will align with the BLF’s annual asset allocation plans. The BLF will now proceed with signing investment mandate agreements with the five asset managers.
Longview Networks: Institutional Investment Conferences and Summits
