Hungary establishes categorisation of investment funds and introduces new investment rules


According to the decree, there will now be four main types of funds based on their primary asset categories: securities funds, real estate funds, venture capital funds and mixed funds. In addition, there will be a total of fourteen categories of investment funds within the four types. These categories are already known in the market and some of the categories are regulated in the existing decree.

The new decree provides for separate asset composition and asset ratio rules for each investment fund category. For instance, bond funds must invest at least 55% of their assets in credit instruments, equity funds must invest at least 80% of their assets in shares, and the majority of the funds must invest in some form of government bonds up to at least 3% to 5% of their assets.

In addition to real estate investment funds, the newly introduced mixed funds will also be entitled to invest assets directly into real estate properties and real estate company shares, but must comply with certain requirements of real estate funds.

The decision to select the fund category lies with the fund manager and the custodian. The primary type, however, must be indicated in the fund’s name and, if applicable, the sub-category can also be included.

The above rules will come into force on 1 July 2024, but in March 2024 fund managers and custodians must begin the necessary steps to ensure that investment funds comply with the new rules. Full compliance must occur no later than 1 September 2024.

To comply with the new regulations, fund managers may need to amend the investment funds’ management policies to ensure the establishment of appropriate asset ratios by the deadline.

The article was co-authored by Márton Lázár.

For more information on this decree, contact your regular CMS advisor or these local CMS experts.