Growth asset performances ride market expectations

For immediate release: Tuesday 12 October 2010

Growth asset performances ride market expectations

Fading concerns about a double dip recession in the US and a hard landing in China, along with expectations of another round of monetary stimulus led by the US, contributed to better returns for AMP Capital Investors' funds for the September quarter said director of investment strategy, Shane Oliver.

Equity prices - both global and domestic - rose over the quarter: with Hedged Global Equities returning 12.2% for the quarter and 9.7% for the year; Unhedged Global Equities returning 7.5% and 5.9% respectively; and New Zealand Equities returning 8.4% for the quarter and 3.3% for the year.

Global Property returns were very strong at 15.3% for the quarter and 20% for the year.

Returns for income assets remained positive but more subdued with the New Zealand Fixed Interest fund returning 2.4% for the quarter and 9.4% for the year, and Global Fixed interest returning 2.7% and 10.8% respectively.

AMP Capital's Conservative Diversified Fund returned 3.6% for the quarter and 7.2% for the year, its Balanced Diversified Fund returned 5.9% for the quarter and 6.5% for the year and its Growth Diversified Fund returned 7.8% and 5.5% respectively. The Balanced Responsible Investment Fund returned 5.7% for the quarter and 7.6% for the year.

The lessening of double dip recession worries later in the quarter, the prospect of more monetary stimulus and reasonable valuations for growth assets point to reasonable returns ahead, although volatility is likely to remain high.

"While a US double dip remains a significant risk, historically they have been rare and the US Federal Reserve appears prepared to do whatever it takes to avoid a return to recession. As a result we expect that the economic expansion will continue, but at a sub-par pace in developed countries."

"Although growth in developed countries looks like remaining constrained, growth in emerging countries is likely to remain strong. The combination of a continuing economic recovery, additional monetary reflation and attractive valuations should provide ongoing support for shares."

"However, returns are likely to remain volatile reflecting sovereign debt risk, particularly in Europe, the need for tighter fiscal policy over the medium term, poor household balance sheets in the US and international currency tensions between the US and emerging countries", said Mr Oliver. 

ENDS

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