Therefore almost everyone keeps his allocation unchanged, with the share of buyers down from 53% to just 17%. Nevertheless, most of the fund selectors our researcher spoke to still see plenty upside for the asset class.
Quest for ethical funds
With their allocation to Asia set, Belgium’s fund selectors have now shifted their focus to the wider emerging markets. Six in ten of interviewees say they will increase allocation, slightly more than in September and the same number as in June. The remainder keep their exposure unchanged. Several fund selectors said they are specifically looking for SRI-labelled, ethical funds within the asset class, in response to a rising demand from clients.
All eyes on the dollar
The number of fund selectors who plan to increase their allocation to both emerging market government 
and corporate bonds has dipped significantly since September. Fund selectors told our interviewer they are somewhat anxious about the impact the rising dollar will have on emerging markets. As many emerging market currencies have shown weakness over the past months, both dollar-denominated corporate bonds and local currency government bonds are under increased scrutiny.
Dollar-bond issuers located in emerging markets might see themselves confronted with an increased debt burden if they use the proceeds of their bond issuance to invest in projects denominated in local currency. For both asset classes, sentiment has turned net negative, though the asset class remains popular compared to the other fixed income categories.
