To construct a diversifying portfolio and enhance long term risk-adjusted returns, the Bureau of Labor Funds, BLF for short, will embark on “Enhanced Global Emerging Markets Dynamic Multi-Factor Equity” mandate program, targeted amount of 1.5 billion US dollars. The announcement has been published on the BLF website since 19th November 2018 and selection procedures are expected to be carried out in 1H2019.
As investment techniques advance, and indexing methodologies evolve, compared with market value weighted ones, more agile and active-bearing smart-beta strategies were constructed and widely recognized by investors globally. For the purpose of better long-term risk adjusted returns than traditional indices, the BLF has designated several different mandate types which factor fundamental, dividend, qualitative, volatility, and value characteristics to global, regional or thematic investment since years ago. The innovation captures capital markets’ interest and by which BLF was awarded several times as annual Institutional Excellence and best innovative from internationally renowned magazines.
The investment plans of funds are emphasized on diversified allocation; to intensify satellite exposures of overseas investment, the objective of new mandate is aimed at emerging market. All components of the designated index are expected to have not only high quality, low risk, and value, but sentiment feature. The latter is mixed with price momentum and earning surprise; as a result, the BLF shall have chances to participate in companies’ growth in terms of stock price or revenue. Above all, of the BLF smart-beta strategies, this is the first time to land in factor timing investing territory. Specifically, the index will be dynamically adjusted according to market moves in advantages of downside protection and return enhancement. To diversify managers’ style, the program is designed as enhanced investment while expecting the asset managers apply active management with delicate and swift maneuvers to enhance return.
For the long run, the BLF will keep strengthening its overseas exposures and ensure the financial soundness and retirement welfare of the workers and fellow countrymen by creating robust revenue in the low-rate and volatile environment.
- From：Planning and Audit Division
- Last Update Date：2018-12-21
- Hit Rate：569