TAIPEI, July 1 – The Bureau of Labor Funds announced its investment performance for May 2024, revealing a significant decline in returns due to global financial market uncertainty and currency fluctuations. As of the end of May, the total size of the labor fund reached NT$6.8949 trillion, but with a negative return of 4.26%, the fund recorded a cumulative loss of NT$291.97 billion for the year.
In May alone, the fund saw a sharp decline of approximately NT$92.9 billion, driven by a volatile exchange rate and mixed global economic signals.
Breakdown of Fund Performance
According to the Bureau, individual components of the labor fund posted varied returns due to their unique investment scopes and regulatory limitations:
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New Labor Pension Fund:
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Fund size: NT$4.5549 trillion
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Loss: NT$203.91 billion
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Yield: -4.32%
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Old Labor Retirement Fund:
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Fund size: NT$1.282 trillion
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Loss: NT$37.79 billion
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Yield: -4.17%
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Labor Insurance Fund:
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Fund size: NT$1.804 trillion
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Loss: NT$46.73 billion
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Yield: -4.66%
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Other sub-funds also saw losses, except for the Occupational Accident Insurance Fund, which managed a slight gain:
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Employment Insurance Fund:
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Size: NT$174.3 billion
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Yield: -2.01%
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Wage Arrears Compensation Fund:
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Size: NT$19.6 billion
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Yield: -1.48%
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Occupational Accident Insurance Fund:
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Size: NT$37.4 billion
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Yield: +0.76%
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Factors Behind the Losses
The Bureau cited multiple external pressures that weighed on returns. Globally, market sentiment remained fragile due to uncertain U.S. economic policies and international fiscal outlooks. Early in May, hopes for improved U.S.-China trade relations offered some optimism, but progress has remained slow.
In addition, Moody’s downgrade of U.S. sovereign credit spurred investor caution, despite Washington’s efforts to introduce favorable tax policies. The Federal Reserve’s high interest rate stance and lack of clarity on future rate cuts added to market unpredictability.
Domestically, the Taiwan dollar appreciated by more than NT$2 against the U.S. dollar during the month. This sudden strength in local currency pressured Taiwan’s export-driven sectors and affected market confidence. Although Taiwan’s stock market rebounded, the sharp exchange rate volatility negatively impacted the valuation of foreign investments held by the labor fund.
Prudent Strategy Ahead
Despite short-term challenges, the Bureau of Labor Funds emphasized that currency movements tend to stabilize over the long run. The agency noted it will continue to adjust its asset allocation based on evolving market conditions, following a prudent investment strategy to safeguard long-term fund performance.
The bureau reaffirmed its commitment to careful fund management, taking into account both domestic and international economic dynamics.
