The global economy could be mired in protracted slow growth, challenging efforts by pension funds to generate sufficient investment returns for their clients, the head of Quebec’s pension fund manager said Friday.
“When we look across the global economy we don’t see any big engines, any big locomotives capable of accelerating global growth,” Caisse de depot CEO Michael Sabia told reporters after releasing results for the first half of 2015.
Read: Caisse invests in U.S. office properties
The country’s second-largest pension fund manager said its net investments grew 5.9% in the first half of 2015 as total assets reached $240.8 billion. That was down from 6.7% growth in the first six months of 2014.
The Caisse said Friday that growth for the six months ended June 30 exceeded the 5.2% rate of it benchmark portfolio index.
In addition to investment gains, net deposits increased $1.8 billion as net assets increased from $225.9 billion as of Dec. 31, 2014.
Sabia declined to say whether he anticipates returns will weaken in the rest of the year, but he said there’s good reason to wonder if the next four to five years will be as strong as the last six.
The Caisse said its four-year average annual return was 10.2%, generating $75 billion in net investments. That compared with a 9.7% gain for the benchmark index.
Read: Caisse buys stake in Asian real estate developer
China’s economy is slowing, Europe is struggling and improved growth of 2% to 2.5% in the United States is likely not enough to accelerate global growth. With interest rates hovering near zero and many countries facing heavy debts, Sabia said central banks have few weapons at their disposal.
The environment has forced large institutional investors to seek international opportunities and innovative strategies such as the Caisse’s model to finance and carry out public infrastructure projects in Quebec and abroad. The Caisse is keen to pursue opportunities in the U.S. and expects to disclose more details about Quebec projects in the coming months.
“It’s not time to go the beach. It’s time to double-down and lift our game and continue to outperform our reference portfolio.”
Read: Caisse invests in toll roads
Meanwhile, Sabia came to the defence of embattled Quebec transportation manufacturer Bombardier, whose lowly share price sank another nine per cent on Friday after closing at a 22-year low of $1.46 on Thursday.
He said new chief executive Alain Bellemare is taking all the right steps to turn the company around, but warned such efforts take time.
“Everybody wants everything to happen overnight. Well you don’t turnaround businesses overnight. It’s hard work and that’s what he is doing,” Sabia said, repeating similar words of support previously offered to SNC-Lavalin and Rona.
The Caisse is one of Bombardier’s largest investors with 41.6 million shares as of Dec. 31, according to Thomson Reuters.