Although Hungary's domestic fund market is fairly unsophisticated, its stock market is one of the region's most popular, due mainly to steady economic progress and initiatives such as the government's move towards funded pensions.
The domestic funds market is not set up to deal with the demands of global asset allocaters. Creditanstalt has launched a handful of funds investing in Hungarian equities. Other banks vying for savings include Bayerische Landesbank, ABN Amro and local banks such as Commercial Bank and Hungarian Post Bank.
There is a well established universe of offshore funds covering the region, and many have a high weighting of Hungarian stocks.
According to Croydon-based Forsyth & Partners, the Hungarian market, like the Polish, has experienced strong buying from global equity funds because they probably see Hungary, Poland the Baltic states becoming the future Belgiums and Italys".
The average weighting of Eastern Europe funds in Hungary has edged lower in recent months, from near 30% to 25%. Henderson Central and Eastern European is the biggest bull, with 50% of assets committed to the market. Lloyds and Commercial Union both have around 39%. Hungary has recently been the largest weighting (32%) in Schroders' Guernsey-domiciled Eastern European fund. Richard Newell"