As with the overall securities market, the investment fund industry’s rapid growth in 1996 was maintained and gained momentum into 1997. There were less than 10 investment funds at the beginning of 1996. At the close of year 1997 there were 24. There has also been phenomenal growth in the funds being managed - from EEK 78 million at the end of 1995 to EEK 1,546 million just two years later. At its peak the stock market’s net asset value of funds was over EEK 2.5 billion.

There are three types of investment funds in Estonia. Closed-end privatization funds accounted for 40 percent of the industry at the beginning of 1996, but that had fallen to below ten percent by the end of 1997. Open-end funds saw their place in the market grow from 60 to 70 percent but fell to 45 percent following October’s stock market crash. Since the crash money market funds have become the most utilized.

Open-end funds and closed-end privatization funds invest mainly into the Baltics. Five Estonian funds target Russia and account for 20 percent of the industry. Money market funds invest in commercial papers of Estonian issuers and equity repo agreements.

The four biggest players in the Estonian fund industry are Hansa Asset Management, Hoiupank Asset Management, EstIB-Talinvest Asset Management and Ühispank with its two fund management branches. There were also four other smaller fund management companies operating at the end of 1997.