Labor funds post third-largest monthly loss on record in July

Labor funds administered by the Ministry of Labor’s Bureau of Labor Funds reported the third largest monthly losses ever, losing over NT$240 billion in July amid global volatility caused by worries over corporate earnings and geopolitical unease, data released by the bureau showed yesterday.

Citing the data, the bureau said the labor funds incurred NT$246.36 billion in losses in July, after NT$77.1 billion in gains in June.

Due to July’s heavy losses, the bureau said, the accumulated gains in the value of assets in the funds’ portfolios and income on investment totaled about NT$1.96 trillion from January to July, down from about NT$2.20 trillion during January-June.

Bureau of Labor Funds signage is pictured at the Ministry of Labor in Taipei in an undated photograph.

Photo: Li Ching-hui, Taipei Times

In addition to worries about corporate earnings amid fears over an AI bubble and lingering tensions in the Middle East in July, the bureau said global financial markets were also affected by uncertainties created by U.S. monetary and trade policies.

However, global financial markets still posted significant gains in the first seven months of this year with the Taiex, the Taiwan Stock Exchange’s benchmark index, soaring 48.88 percent and the MSCI World Index rising 11.33 percent. In contrast, the Bloomberg Barclays Global Aggregate Bond Index dropped 0.75 percent.

As of the end of July, the combined value of the funds managed by the bureau, including the Labor Pension Fund, the Labor Retirement Fund, the Labor Insurance Fund, and the Employment Insurance Fund, stood at NT$9.08 trillion, according to bureau data.

The seven-month gains translated into a rate of return of 25.03 percent from January to July, down from 28.46 percent during January-June, according to the bureau.

The bureau said 54.63 percent of its investments were made overseas from January to June, while the remaining 45.37 percent were invested in the domestic market.

The labor funds managed by the bureau have various functions, mainly aimed at helping workers. In particular, the Labor Pension Fund, collects contributions from employers and employees every month and is managed by the bureau to boost the asset value, in a bid to help employees save and invest for their retirement.

The value of assets in the Labor Pension Fund, launched in 2015, totaled NT$5.97 trillion as of the end of July, the highest among all labor funds, and its rate of return for the January-July period stood at 24.58 percent, the bureau said.

The Labor Retirement Fund, which has been in place since 1984, had about NT$1.20 trillion in assets as of the end of July, with a rate of return of 35.02 percent for the seven months, the bureau added.

Meanwhile, the Bureau of Public Service Pension Fund said yesterday the Public Service Pension Fund, which the bureau manages, recorded NT$292.49 billion in gains in the seven months, equal to a rate of return of 21.64 percent.