Since then, it has slowly declined and today there are around 580 traditional local funds (as of August 2024) operating in Hungary. With the development of the domestic legal framework, more and more foreign investment funds became available in the local banks’ offering too. Since 2014, locally registered funds are classified either as UCITS* or AIFs**.

Evolution and market dynamics

The first investment fund management companies were formed in 1991, and their number gradually increased. However, a significant number of today’s approximately 50 normal (traditional) fund managers*** were established in the 1990s. The second wave of rapid growth in the number of fund management companies since the 2010s was brought about by the emergence of venture capital and private equity funds (mainly non-public funds).

The aggregate assets of investment funds managed by BAMOSZ**** members amounted to HUF 14,013 billion (36.7 billion euro) or approximately 20% of Hungary’s GDP at the end of 2023. The assets under management (AUM) has been moving cyclically depending on the prevailing interest rate environment and the economic situation. The past two years have seen spectacular growth in local players AUM, supported by the increasing willingness of the households to save due to precautionary considerations,the strong asset class performances and the permanent absence of bank deposit competition.Regular investments still play a smaller role in this achievement.

70% of the total AUM of the BAMOSZ member local asset management companies are managed by the four largest players:

• OTP, Erste, K&H and MBH, subsidiaries of local banks.

• Raiffeisen Investment Fund Management Co. is the seventh largest company with its AUM of HUF 600 billion (1.5 billion euro) as of September 2024.

Most of the local funds managed by BAMOSZ members are AIFs (although their investment limits are very close to UCITS limits with few exceptions). 80% of them are open ended funds. Traditional asset classes such as money market, bond, equity, and balanced funds are all present. One important characteristic of the local fund management market is the large number of funds managed along absolute return mandate. The market leader in managing this type of funds is Hold Asset Management, which is the most important independent player of the market. The wealth managed by a few real estate funds is also significant. Today, Erste and OTP are the biggest players here, but Raiffeisen Investment Fund Management Co. played a pioneering role with its fund established as early as 2002. Fund of funds are also playing an important role in importing new solutions and wide coverage of assets; Raiffeisen Investment Fund Management Co. is an active user of this opportunity.

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* UCITS: The Undertakings for the Collective Investment in Transferable Securities (UCITS) is the European Commission's regulatory framework for managing and selling mutual funds. UCITS funds can be registered and sold in any country in the European Union using unified regulatory and investor protection requirements.

** AIFMD: The Alternative Investment Fund Managers Directive (AIFMD) is a European Union (EU) regulation that applies to alternative investments, many of which were left largely unchecked prior to the 2008-09 global financial crisis. The directive sets standards for marketing around raising private capital, remuneration policies, risk monitoring and reporting, as well as overall accountability.

*** Hungarian Association of Investment Fund Managers

**** BAMOSZ: Befektetési Alapkezelők és Vagyonkezelők Magyarországi Szövetsége – Association of Hungarian Investment Fund and Asset Management Companies. The number of BAMOSZ member asset management companies is 23 currently.

Source: Raiffeisen Investment Fund Management Co., as of September 2024