Labor Pension Fund (勞退基金) officials decided on Friday to allocate NT$12 billion, or 5 percent of the fund, to outside asset management professionals early next year.
The fund is the last among the four government funds that have previously decided to turn over capital to the professionals.
The three other government funds made the same move over the past several months, and the total amount the four funds will turn over to outside managers in the first stage will be NT$62 billion.
Overseers of the Postal Saving Fund (郵儲基金) decided last Monday to give NT$20 billion of the fund to nine outside managers, including Shin Kong Securities Investment Trust Co (新光投信) and Chase Fleming Securities Investment Trust Co (怡富投信).
Authorization for the NT$20 billion is going to be approved by the end of this month at the earliest.
The first fund to take on outside advisors was the Civil Servant Pension Fund (公務人員退休撫卹基金), which gave NT$15 billion nine local fund managers last July.
The Labor Insurance Fund (勞保基金), which has NT$510 billion in assets, also decided recently to provide NT$15 billion of its fund to six outside managers in November.
The annual management fee for to manager government funds has been set at 0.3 percent.
It means that the NT$62 billion authorization in the first stage would generate about NT$186 million in income for the local fund industry in the first year.
Since most government funds will only provide 3 percent to 5 percent of their fund to outside managers in the early stage, the percentage is likely to increase several fold to 20 percent or 30 percent of each government fund in the future.
Part of the reason that the four government funds have decided to seek professionals assistance in an effort to fend off political pressure from the government to intervene in the local stock market, market watchers have said.
Such intervention in the past year has generated significant losses in the short-term.
According to local Chinese-language media reports, total losses for the government funds investing in local stock market in the past year have lost more than NT$100 billion in value.
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