Wellington, Oct 12 NZPA - AMP Capital Investors is expecting "reasonable" returns ahead with the lessening of worries about a double dip recession in the United States, the prospect of more monetary stimulus led by the US, and reasonable valuations for growth assets.

But it also expects that volatility will be 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," AMP Capital Investors director of investment strategy Shane Oliver said today.

"As a result we expect that the economic expansion will continue, but at a sub-par pace in developed countries."

Growth in emerging countries was likely to remain strong, Mr Oliver said.

"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."

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

Equity prices -- both global and domestic -- had risen during the quarter, with hedged global equities returning 12.2 percent for the quarter and 9.7 percent for the year.

Unhedged global equities returned 7.5 percent for the quarter and 5.9 percent for the year, while New Zealand equities returned 8.4 percent for the quarter and 3.3 percent for the year.

Global property returned 15.3 percent for the quarter and 20 percent for the year, while the New Zealand fixed interest fund returned 2.4 percent for the quarter and 9.4 percent for the year, and global fixed interest returned 2.7 percent and 10.8 percent.