Three months ago when the panel reviewed its portfolio it came up with what could be a very bullish outlook for the world.

Back then it predicted growth in the United States would be strong in calendar 2002 (possibly hitting 4%).

Its view on growth has come through in recent numbers, although these haven't been translated into returns.

The drivers of this growth include a recovery in production in the United States, productivity growth and restrained labour costs.

However, it says other factors, including the shadow of Enron, tension in the Middle East and rising oil prices are holding things back.

The panel's conclusion was that while there are some short-term issues which meant that investors had not been paid, yet, for moving into equities, the market is comfortable with the growth environment and any surprises may well be on the upside.

It has left its portfolio unchanged in its latest quarterly review.

Of this allocation 44% is invested in international shares and 23.5% is in Australian equities. The panel marginally favours New Zealand property as well.

Its big underweight position is international fixed interest (11.5%versus a benchmark of 25%).

BT Funds Management chief executive Craig Stobo, who is a member of the panel, says not to expect any great returns in the next year or so.

"(Investors should) not be looking for spectacular double digit, end-of-the-'90s returns," he says.

Rather they should be expecting "strong single digit returns".

His view is that global markets will provide modest, not spectacular returns.

Stobo expects the recovery in the US to be gradual, partly because the recession hasn't been particularly deep. Likewise, he is not expecting the US Federal Reserve to start lifting the cash rate up from its historically low level of 1.75% until about October. He says once the rate starts going up it could rise by about 100 basis points (1%).