Taiwan's $286 Billion Pension Fund Reduces Dollar Holdings

Taiwan's Largest Pension Fund Reduces US Currency Exposure Amid Market Volatility

Taiwan's largest pension fund, the Bureau of Labor Funds (BLF), has reduced some of its US currency exposure in response to heightened market volatility and a broader global reassessment of dollar assets. The BLF manages nearly NT$9 trillion ($286 billion) in retirement and insurance assets, and has recently lowered dollar-denominated equity and fixed-income exposures in mandates overseen by external asset managers.

According to Astraea Lin, director of BLF's Foreign Investment Division, the de-dollarization trend is slowly taking place, prompting the fund to diversify across currencies and assets to minimize the impact of any single market or currency on the fund's returns. While the US dollar still shows strong resilience globally, with clear advantages in terms of market depth and liquidity, there is currently no clear alternative.

The BLF's move underscores a broader shift among some global institutions, including pension funds and central banks, to trim exposure to dollar assets as investors grow wary of the unpredictability of US policy shifts. The Bloomberg Dollar Spot Index has extended losses this year, following a 8.1% decline in 2025, its worst performance in eight years.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

As of March, the BLF allocated more than half of its assets overseas, primarily into equities and fixed income. For the past two decades, the fund has largely awarded foreign mandates in US dollar terms. NT$3.66 trillion of the fund's overseas investments were managed externally, out of total offshore holdings of NT$5.07 trillion.

The BLF is also seeking to support Taiwan's ambitions of making its chip-making economy a regional financial hub. In its latest two mandates, totaling about $4.6 billion, the fund asked participating managers to submit more detailed long-term plans for developing the local capital market. The plans, which are expected to include considerations such as setting up offices in Taiwan and expanding local staffing, are now part of the evaluation criteria for winning mandates.

The BLF's move to reduce US currency exposure and support Taiwan's financial hub ambitions reflects a significant shift in the global investment landscape, as investors become increasingly wary of dollar assets and seek to diversify their portfolios.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline