A sluggish economy and historically low interest rates are being blamed for weak returns from the city of Port Coquitlam's investment portfolio.
In 2012, the city managed a rate of return of 1.93% on the more than $93 million it has invested in term deposits - funds that will eventually be used for future capital projects.
That percentage is slightly higher than the 1.85% return the city received last year, but is a long way from the 4% to 5% range achieved prior to the recession.
But while investment returns have not been great in the last few years, Richard Wells, the city's interim director of corporate services, said the funds are keeping pace with inflation.
"If the inflation rate is going up 2% we are equal with our purchasing power," he said.
Since 2008, when PoCo's investment returns hovered around the 4% mark, the city's portfolio has not broken 2% per year, hitting an all-time low of just under 1.5% in 2010.
The Community Charter limits the kinds of investments municipalities in British Columbia can make. PoCo's portfolio is primarily tied up in short and medium term deposits with various financial institutions including Envision, VanCity and the North Shore Credit Union.
However, more than $20 million of the $93 million is invested in an intermediate fund with the municipal finance authority.
With interest rates at historic lows, Wells said the city has kept the bulk of its portfolio in short and medium term investments. Locking in long-term does not make sense, he added, because rates are expected to increase.
"Typically, the longer you go out the higher the rate of return," he said. "At the present time, the speculation is that the interest rates will increase. [If we invested long term] we would be caught with a holding that made less interest revenue."
A report outlining PoCo's investments for 2012 was brought before the finance and intergovernmental committee on Monday.
