according to the chairman and chief investment officer of Morgan Grenfell Asset Management (MGAM).

The UK, which returned 2.3 percent over first quarter 1995, is experiencing "good growth with modest inflation'' and remains MGAM's favourite world equity market because it is attractively valued against both earnings and gilts, said Mr. Mike Bullock.

UK corporate earnings are anticipated to be at least 10 percent this year, he said.

MGAM, a subsidiary of Morgan Grenfell & Co., the investment banking arm of Germany's Deutsche Bank AG, oversees about $1.5 billion in Bermuda captive insurance company investment assets.

The association with Bermuda captives dates to the early 1970s and today its Island clients number about 20.

"Our enthusiasm for the UK is tempered only by political concerns and the possibility of a setback from an overvalued Wall Street,'' the company said in their recent quarterly economic focus.

But, said Mr. Bullock, the smart money will stay out of US equities at this time.

"There is a possibility of a resurgence in US growth causing another lurch in the US dollar downward leading to a destabilisation of the world's capital markets,'' said the London-based investment specialist.

"If anywhere in the world there is a big risk of inflation it would be the US. US equity markets are not the place to be.'' But Mr. Bullock said he was positive on Japan.

In Japan, "corporate earnings will go up'' provided that country increases its liquidity.

The solution for that jurisdiction, said Mr. Bullock, is to increase money supply which will result in a downward movement of the Yen.

Japan is a higher risk for investors but might prove to be one of the year's "big surprises.'' Overall, this year is not an investment environment to expect spectacular returns but a 10 percent return is within reach, he said.

On the world's bond markets, Mr. Paul Berriman, also with MGAM, said last year was a "savage correction'' for that security.

Mr. Berriman's expertise is in US bonds and insurance portfolios.

He suggested the highest risk/reward scenario in today's bond market might be Bulgarian bonds.

Bulgaria is facing sever infrastructure problems and there is a 60 percent chance that jurisdiction will default on loans but in the long term -- about five years on -- Bulgarian bonds could yield excellent return, he said.

William R. Storie & Co., a Bermuda insurance consulting firm which markets Morgan Grenfell in Bermuda, hosted the global investment opportunities presentation by MGAM Wednesday evening at the Royal Bermuda Yacht Club.