Turkey's fund bubble bursts as regulators order 131 liquidations

October 2, 2026 at 06:41 PM2 min

This digest was compiled by AI from multiple sources — links to the originals are below.

Turkey's Capital Markets Board ordered the liquidation of 131 investment funds managed by seven asset managers after some warned they could not meet redemption payments. The funds had grown to more than $20 billion in assets over three years, drawing nearly half a million investors. The crisis pushed Turkey's main stock index into a bear market with its worst month since 2008 in September.

Key Facts

Regulators ordered the liquidation of 131 funds managed by seven asset managers after warnings that some could not meet redemption payments.
The funds reached more than $20 billion in assets over three years and attracted nearly half a million investors, including politicians, former officials, and celebrities.
Tera Portfoy's assets under management increased more than 10-fold to $14.3 billion, while Pusula Portfoy's assets jumped 13-fold to $13.2 billion by August 2026.
Tera's TLY hedge fund returned 747% in lira terms between January and July 2025, and its cumulative return climbed to more than 15,000% by September.
Turkey's main stock index had its worst month since 2008 in September, entering a bear market amid the fund crisis.

The Fund Boom

Turkey kept monetary policy tight to tame inflation and encourage lira-denominated savings, boosting interest in funds offering returns above inflation and local deposit rates. Some investment funds became concentrated in a single stock or asset, while others had only a handful of investors. Some of these funds traded recently listed small-cap shares, where lower liquidity allowed prices to move sharply, which in turn boosted the daily returns of the funds holding them.

Warning Signs

Turkish officials warned about manipulation through investment funds in November 2025. Finance Minister Mehmet Simsek said, "We know that these manipulations are being carried out particularly through certain funds," adding that regulatory gaps would be addressed. Omer Gonul, then chairman of Turkey's Capital Markets Board, said regulators were monitoring funds used to circumvent rules and warned that managers could face penalties including license cancellations.

Two Funds at Centre

Two asset managers at the centre of the turmoil, Tera Portfoy and Pusula Portfoy, expanded rapidly before the crisis. Turkey's portfolio management industry assets rose to $329 billion in August 2026 from $246 billion a year earlier, data from the Capital Markets Board shows. Tera's assets under management increased more than 10-fold to $14.3 billion over the same period, while Pusula's assets jumped 13-fold to $13.2 billion as more investors trickled in. By the end of August, Tera was sixth and Pusula eighth among Turkey's portfolio managers, each with a share of total managed assets exceeding 4%, making them the sector's biggest non-bank companies.