How to invest in Budapest Stock Exchange index funds in 2024

Find out how to invest in the Budapest Stock Exchange index, learn which trading platforms have the lowest fees, and what’s easiest for beginners.
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Updated on Aug 5, 2024
Reading time 11 minutes

It only takes a few minutes to invest in the Budapest Stock Exchange index. One of the simplest and most popular ways to invest is to buy shares in a Vanguard Budapest Stock Exchange ETF through an online trading platform.

Where can I invest in the Budapest Stock Exchange index?

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According to our expert research, Plus500 is the best ETF broker to invest in Budapest Stock Exchange index funds. 

Both Budapest Stock Exchange ETFs and Budapest Stock Exchange CFDs are available to invest in through Plus500 .

Here are three more places to buy the Budapest Stock Exchange, ranked according to their cost, security, and features.

We found 4 online brokers for users based in

Plus500 review
4.5
Plus500
Min. Deposit $100
Fees From 2%
No. assets 2800+
Demo account Yes

Plus500 review

Buy or sell stock CFDs with Plus500. 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

eToro review
4.6
eToro
Min. Deposit $100
Fees 1%
No. assets 50+
Demo account Yes

eToro review

eToro offers real assets only, no CFD products. eToro securities trading offered by eToro USA Securities, Inc. (‘the BD”), member of FINRA and SIPC. Investing involves risk, and content is provided for educational purposes only, does not imply a recommendation, and is not a guarantee of future performance. Invezz.com is not an affiliate and may be compensated if you access certain products or services offered by the BD.

Public.com review
4.4
Public
Min. Deposit $20
Fees 1-2%
No. assets 9000+
Demo account No

Public.com review

Cryptocurrency execution and custody services are provided by Apex Crypto LLC (NMLS ID 1828849) through a software licensing agreement between Apex Crypto LLC and Public Crypto LLC. Crypto trading on Public platforms is served by Public Crypto LLC and offered through APEX Crypto. Please ensure that you fully understand the risks involved before trading.

How do I invest in the BUX index?

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The easiest way is to sign up to a stock broker, open an investment account, and buy shares in an Budapest Stock Exchange ETF or CFD. This guide explains how to do it:

Step 1. Sign up to Plus500

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We recommend using Plus500 to invest in Budapest Stock Exchange. Sign up for a brokerage account and deposit some money. You may need to supply a form of photo ID to verify the account.

Plus500 review
4.5
Plus500
Min. Deposit $100
Fees From 2%
No. assets 2800+
Demo account Yes

Plus500 review

Buy or sell stock CFDs with Plus500. 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Step 2. Decide how to buy Budapest Stock Exchange

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This boils down to choosing between an Budapest Stock Exchange ETF or CFD. ETFs are generally better suited to investors who want to passively track the Budapest Stock Exchange’s performance. CFDs offer a greater range of trading options: you can use leverage, short the index, or buy and sell it outside of trading hours.

Step 3. Invest in the Budapest Stock Exchange

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Sign into your trading account and search for the Budapest Stock Exchange. Hit the ‘buy’ button and enter the details of your purchase, such as how much you want to spend. Hit ‘buy’ again to execute the trade.

Step 4. Monitor your investment

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When you buy a CFD, the trade goes through more or less instantly, and you’ll be able to see your new open position in your trading account. ETF purchases can take longer, and if you buy outside of traditional trading hours it won’t go through until the next morning.

Your trading account will show the price change in the Budapest Stock Exchange since you bought it, so you can see your profit/loss at a glance. Use that information, along with your own research, to decide when to sell the Budapest Stock Exchange and close your position, ideally at a profit!

 

The different ways to invest in the BUX

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As we mentioned above, there are numerous ways to put your money into the Budapest Stock Exchange. ETFs and CFDs are the simplest options for beginners, but there are alternatives. Here’s a brief overview of each option and who it’s best suited for.

Budapest Stock Exchange ETFs

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An ETF (exchange-traded fund) is an investment fund traded on a stock exchange, much like a stock. Exchange traded funds can hold different assets, such as individual stocks, bonds, or commodities, or serve as a proxy for a stock market index.

An Budapest Stock Exchange ETF is one way of investing in the Budapest Stock Exchange. It’s simply an investment fund that mirrors the performance of the Budapest Stock Exchange. When you buy shares in the fund, the value of your investment will rise or fall with the Budapest Stock Exchange itself. 

ETFs are ideal for new investors because they have a very low minimum investment. You can start with a few pounds and get exposure to some of the world’s largest companies. They’re also practical if you plan on trading the Budapest Stock Exchange index, because you can buy or sell shares in the fund throughout the day.

Examples of popular BUX ETFs

  • Expat Hungary BUX UCITS ETF
  • BUXETF (HB)

Budapest Stock Exchange index funds

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An index or mutual fund is an investment fund that aims to track the performance of a stock market index, such as the Budapest Stock Exchange. It’s very similar to an ETF, in that there are low management fees and you can buy shares through your online broker.

However, there are a couple of differences. Budapest Stock Exchange index funds are only priced at the end of each trading day, so you can buy or sell shares in the fund once per day. There may also be a higher barrier to entry, through a much larger minimum investment when you invest in Budapest Stock Exchange index funds.

That means an Budapest Stock Exchange mutual fund is better suited for long term investors with a higher initial budget, where the infrequent trading and barriers to entry are far less of an issue.

Examples of popular BUX index funds/mutual funds

  • OTP Alapkezelő Zrt. BUX Indexkövető Részvény Alap
  • Magyar Takarékbank Nyrt. BUX Index Alap
  • K&H Bank Nyrt. BUX Index Alap

Budapest Stock Exchange CFDs

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CFDs (contracts for difference) are a way to speculate on Budapest Stock Exchange price changes with more flexibility than if you use an ETF or index fund. A CFD is a ‘derivative’, which means it gets its value from the underlying asset – in this case the Budapest Stock Exchange – but it’s separate from it.

As a result, CFDs can be leveraged, where you borrow money to multiply the size of the trade, or they can be used to go ‘short’, where you place a trade on the index to fall in value. You can also buy and sell them outside of regular trading hours.

All of this means Budapest Stock Exchange CFDs offer the potential to outperform a fund that passively tracks the Budapest Stock Exchange’s performance. Of course, you can also underperform it as well. Tools like leverage and shorting introduce a lot more risk, and are best left to experienced traders.

Budapest Stock Exchange futures

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Futures contracts are agreements to buy or sell the BUX at an agreed price on a set date in the future. Budapest Stock Exchange futures are a means to predict how you think the index is going to perform over a set time frame, such as the next three or six months.

Most futures contracts involve leverage, so you only put up a small part of the total trade value (the margin) when you buy one. That makes futures more risky, and they require a bit more financial expertise to understand as well.

Some traders use futures as a hedge against the performance of stocks they own. For instance, if you own stocks that are part of the Budapest Stock Exchange then you might want to short the Budapest Stock Exchange so that you still make some money if the price falls.

Budapest Stock Exchange stocks

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Another way to invest in the Budapest Stock Exchange is to buy shares in the individual stocks that the index tracks. It isn’t practical to buy every share in the index, but you can invest directly into a few of the most heavily weighted stocks in the Budapest Stock Exchange in order to get broad exposure to its performance.

The most heavily weighted stocks in the Budapest Stock Exchange tend to be the largest companies by market capitalisation. If you invest directly in those largest stocks, you gain exposure to the index without taking on the risk of all the underlying companies.

One reason to do this is that these larger companies with the highest market cap dominate the index anyway, so that it can give you the impression of a diversified portfolio while actually being reliant on the performance of those particular stocks.

For the Budapest Stock Exchange index, the largest stocks you might choose to invest in are:

CompanyIndex weight
OTP Bank (OTP)  14.52%
MOL Hungarian Oil and Gas (MOL)  12.91%
Magyar Telekom (TKM)  10.42%
OTP Bank Nyrt. (Pref) (OTP-P) 8.86%
Richter Gedeon Nyrt. (RICH)  7.84%
K&H Bank Nyrt. (KBC)  6.32%
Duna House Nyrt. (DH) 4.97%
Fővárosi Takarékbank Nyrt. (FHB) 4.27%
OTP Alapkezelő Zrt. (OTP-A) 3.94%

The flip side of investing directly like this is that you lose the diversification and stability that comes with buying into an entire index. It requires much more hands-on management to do your own stock picking, so it’s best suited to more experienced investors.

How much does it cost to invest in the Budapest Stock Exchange index?

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From $0 to $5, depending on how you invest. For each option, you must consider the cost of buying the actual asset, whether that’s an ETF, index fund, CFD, or share, plus the fees associated with it.

InstrumentTrading feeManagement fee
Exchange traded funds$0-$5.990-0.2%
Index fund / mutual fund$0-$5.990.1-2%
Individual stock$0-$3None
CFD$0None

*A fee comparison of 3 leading brokers for example purposes

ETFs and CFDs are generally the cheapest option overall, as they have low fees and a low minimum investment. Index funds and mutual funds have low fees but may have a high minimum investment. Buying individual stocks is the most expensive option in absolute terms, because the share price of a single large company is often more than $100.

All options are likely to include a trading fee, which you pay each time you make a transaction. Some trading platforms offer zero-fee trading, with others it may be a few dollars. 

Then ETFs and index funds each have their own expense ratio. Expense ratios refer to an annual management fee, charged as a percentage of your total investment. Expense ratios are usually no more than 0.05%, so if you invest $1,000, you would pay $5 per year in management fees.

Should I invest in the Budapest Stock Exchange index? 

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Yes, Budapest Stock Exchange investing is a great choice if you’re looking for a safer investment with more price stability compared to picking individual stocks. It gives you an instantly diverse portfolio with exposure to a broad area of the stock market.

The flip side is that you have less control over which companies you invest in. An index committee decides how the index works, and you can’t pick and choose the underlying companies you like the most. The Budapest Stock Exchange is better suited to hands-off investors, compared to those who have the skills, experience, and desire to pick their own stocks.

What are the advantages of investing in the Budapest Stock Exchange index?

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An index provides instant stock market diversification, where you spread your risk across a large number of underlying companies, rather than one or two. Here are some more reasons why you might want to invest in the Budapest Stock Exchange index:

  • The index is a good way to get exposure to the Hungarian economy. The Budapest Stock Exchange index is made up of the largest companies in Hungary, which means you’ll gain exposure to the overall Hungarian economy. 
  • It’s a reasonably diverse index. While not as diverse as other indexes, the BUX is comprised of companies from various industries. This means you’ll be less susceptible to sector-specific downturns. 
  • It has performed well in the past. While past performance is no guarantee of future returns, the BUX index has seen stable gains, which may indicate how it will perform in the future. 
  • Hungary is a growing economy. Hungary is a growing economy with a young population and a rising middle class. If the nation becomes richer, it could be assumed that the index will perform better. 

What are the disadvantages of investing in the Budapest Stock Exchange index?

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The main risk of investing in the Budapest Stock Exchange is that all the underlying companies are related in some way, so a broader economic downturn that affected the entire country would likely affect many stocks in the index at the same time. Here are some more risks of Budapest Stock Exchange investing.

  • It’s a small index. The Budapest Stock Exchange Index is a relatively small index, meaning it can be more volatile than larger indexes. While this will not be too much of a concern for long-term investors, those with a shorter-term outlook should be cautious. 
  • It is not as well diversified as some other indexes. Although the BUX includes stocks from various industries, it is not as well diversified as other indexes. Many banking stocks comprise the index, which could be dangerous if that particular industry suffers in the future. 

FAQs

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01

Should I invest in the Budapest Stock Exchange through an index fund or ETF?

02

How should a beginner invest in the Budapest Stock Exchange?

03

Can I invest in the Budapest Stock Exchange from the UK?

04

Does the Budapest Stock Exchange pay dividends?

05

Which Budapest Stock Exchange fund is best?


Sources & references

Prash Raval

Prash Raval

Financial Writer

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Prash is a financial writer for Invezz covering FX, the stock market and investing. For over a decade he has traded spot FX full time while running an educational service helping novice traders learn the markets. He has a keen interest in micro and small cap stocks....