Assets managed by Hungary's investment funds could growth to even EUR 50 billion (cc. HUF 13,000 bn) in five years, but even conservative estimates point to a fourfold growth of the market, Günther Mandl, head of asset management CEE of Erste Sparinvest described the potentials of the market in an interview with Portfolio.hu. He said it would be of utmost importance in the years to come to have local asset management companies serve local demand. This is why Erste is not striving for a total centralisation of its asset management activities. As the adoption of the euro draws nearer, regional investors' risk appetite will grow, which may put an end to the sweeping conquest of capital-protected funds on the Hungarian market as well, and open the door for more complex investment products, Mandl projected. 
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Portfolio.hu: How does an expert, who is looking at the whole arena from a "seat up high", see the cultural development of the financial sector in Central and Eastern Europe? 
Günther Mandl: Based on what we have experienced in the region, we can differentiate between four different waves of development, depending on what kind of products and services people are looking for and how advanced the specific country's financial culture is.
As soon as a country's economy is developed enough [...] it enters the fourth wave, in which the needs for asset management services and savings products become ever more demanding in the area of financial services. Hungary has always been among the countries with the largest managed assets and it is now somewhere in the first half of this fourth wave. In comparison, Romania is only at the very beginning.
These stages of development, however, do not really depend on the risk appetite of households. In Austria, for instance, where income per capita is much higher, investors are rather conservative. At the same time, every stage tends to last shorter and the pace of development is clearly faster in the region.
P: What is the driving force behind the growth of the investment funds' market? G.M.: Demand for asset management services is by and large closely linked to GDP growth, but it often stems from an expansion of the financial sector's offers and a repositioning in the focus of sales. In certain countries of the region, e.g. in Romania, the pension reform gives a specific boost to the asset management market.
Growth potential in the field of financial services is clearly reflected by the fact that - according to a survey of ours one or two years ago - only 57% of Hungary's adult population owned a bank account or had some form of savings, while only 20% of them owned any kind of asset management product. The respective ratios in Austria were 93% and 73%, so you have ample room for development in this respect.
P.: There is certainly room to expand to, but up to what point? What is the maximum size the region's fund management market could reach? G.M.: In order to answer that question we have prepared two models. One of these draws parallel to GDP growth, while the other is based on the asset per capita managed in funds.
It was still hard to find an appropriately comparable market for our model. We have finally chosen Spain, as its market has been similarly closed up to its accession to the European Union, and when its GDP per capita reached around EUR 7,000-10,000, investments started to build up at once and the market started to grow dynamically.
Assets per GDP came to 27% by the end of 2007 in Spain. This ratio is much higher in Austria (60%) and the average in the EU is somewhere around 35%, while it is a mere 12% in Hungary, less than 10% in the Czech Republic and Slovakia and does not reach even 1% in Romania, Serbia and Ukraine.
Extrapolating the Spanish example to the markets of the region, we find that the size of the market will grow to nearly its fourfold by 2012 (excluding Poland) and the size of assets managed in Hungarian funds will be up at around EUR 31 bn from EUR 12 bn.
And this is only our conservative estimate. The other model, where we examined funds per capita, foreshadows an even larger growth. Funds per capita in Spain is around EUR 6,500, while the same indicator in Hungary is only EUR 1,200.
If we base our assumptions on this model, we arrive at a nearly sixfold growth on regional markets in the following five years, and assets managed in Hungarian funds could be up at around HUF 50 bn.
The truth lies somewhere between these two models, but both indicate rather clearly how huge potentials the market holds.
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