Singapore's biggest sovereign investor GIC said its portfolio return slowed in its latest five-year period, and that growth would continue to be low over the course of a decade due to vanishing bond yields and weak global growth prospects.
GIC also cited risks including China's slowing growth and limited progress in reforming state-owned enterprises (SOEs), as well as anti-globalization rhetoric in the United States - a member, with Singapore, of the Trans-Pacific Partnership trade deal.
Such concerns add to an already challenging environment. Bond yields have turned negative in Europe and Japan as central banks struggle to lift inflation and revive debt-choked economies, while any interest rate hikes in the United States are widely expected to be gradual.
"These difficult investment conditions can stretch for the next 10 years," Chief Investment Officer Lim Chow Kiat said in GIC's latest annual report.
"GIC is prepared for this protracted period of all-time low interest rates, modest global growth prospects and high valuations of financial assets."
GIC said in its annual report on Thursday that its portfolio return was 3.7 percent per annum in U.S. dollar nominal terms over the five years through March 2016, compared with 6.5 percent in the five years to March 2015.
That was below the 4.6 percent return of a reference portfolio of 65 percent global stocks and 35 percent bonds.