Equity investment has shown a significant rise in popularity in Belgium. The change of emphasis has been at the expense of money market funds, down from 23% of the market in 1995 to little over 10% now. In contrast, equity funds have grown fourfold in market share in the past two years. Of course, bond funds are still most popular with 45% market share.

At 20%, Belgium boosts a relatively high savings rate. The Belgian market is disproportionately large in relation to its population of around 10m, forming around 5% of Europe's investment funds, with only a 30th of the EU population. However, investment funds make up only a small percentage of investable assets.

The Belgian government is naturally concerned that so much of the country's investible wealth appears to find its way over the border to Luxembourg. It has been estimated that as much as 80% of people's private wealth is stashed in bank vaults in the Grand Duchy, which goes some way to explain why the Belgian judiciary took such a heavy-handed approach in arresting the banker Damien Wigny, accusing him of tax fraud. According to research by Lipper Analytical, Luxembourg assets of Belgian provenance are double the amount registered domestically ($54bn compared with $27bn).

The market is also heavily concentrated among the big three banks, Generale de Banque, Banque Bruxelles Lambert (BBL) and Kredietbank. Equally, the five largest funds in the market represent about 20% of the total market assets.The big three have 80% of assets under management.

So far, the success of foreign groups in attracting investment money has been limited. ING's recent bid for BBL was significant in its potential to give ING the ability to offer BBL'sproducts through its independent adviser network there.

Pension funds are mainly managed by banks' and stockbrokers' in-house investment teams. However, market observers note that Belgian institutions are open to the idea of using outside expertise in running their portfolios. As competition from foreign groups increases, investors are expected to shrug off their conservative tendencies.