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Fearful Belgians clutch at Draghi

In the third quarter of 2015 alone, assets held in money market funds increased by a phenomenal €10.9bn to €16.7bn, according to data from the Belgian Asset Managers Association (BEAMA). This cash hoarding went at the expense of their equity holdings, which saw their total share of assets under management decrease from 34% to 27%.

The only long-only asset class that still has firm support from fund selectors in Belgium, is European equities. Even though some interviewees told our researcher on his recent visit to Brussels that they had indeed decreased their allocation somewhat in the wake of the equity

market correction, they intend to raise their exposure again later in the year.

There is one main reason for their constructive attitude: their expectations about the direction of the ECB’s monetary policy. Most interviewees believe Mario Draghi will manage to rally a majority of ECB board members behind his promise to ramp up his quantitative easing programme in March. The Belgians expect this will again boost European equity markets, and they don’t want to miss out.

Asian equities

Asian equities, on the other hand, have been the least loved asset class by Belgian investors in the recent past. Due to both falls in asset prices and redemptions, assets under management in Asian equity funds decreased by almost a third to €2.3bn, according to data from BEAMA.

This stands in sharp contrast to the situation a year ago, when almost half of Belgium’s fund buyers planned to increase their allocation to the asset class. Their main reason for intending to do so back then, was that the asset class looked cheap.

 

 

Though it of course looks even cheaper now, only one in every nine interviewees now plan an increase. The large majority prefer a wait-and-see approach. Most fund buyers who were interviewed by our researcher recently, admitted they are completely in the dark about the prospects for the asset class, and therefore intend to keep their allocations unchanged. It’s pretty much the same picture for global emerging market equities, though there are a few more buyers here.


Part of the Bonhill Group.