Ninth update in our series on the Turkish investment fund crisis. Only what is new, and our analysis.
For the first time since the crisis began, the news is about cash rather than procedure. The Capital Markets Board (SPK) approved an interim payment to investors in funds under liquidation, split the asset managers into two tracks and opened accounts for the voluntary return of excess gains. It also suspended the brokerage Tera Yatırım.
What is new
Interim payment (ara ödeme). In the liquidating funds of four asset managers, Tera, Pusula, Atlas and Hedef Portföy, investors whose entitlement reconciliation (mutabakat) is complete will be paid before liquidation ends. The base is the net investment amount (net yatırım tutarı), calculated by the Central Registry (MKK) for each holder. Below TRY 1 million the full amount is paid, at TRY 1 million or above TRY 1 million is paid. The cap applies per fund, not per investor. Money market funds go first. The payment is netted against the final liquidation settlement, and no units are redeemed at this stage.
Scale. Market estimates put the scope at 65 of the 131 funds in liquidation, about TRY 616 billion in assets, or roughly 92% of the total. The money market funds of these four managers alone hold around TRY 301 billion with some 266,000 investors; the largest, the Tera Portföy money market fund, holds about TRY 224 billion with 167,000 investors.
Three managers liquidate on their own. A1 Capital, Pardus Portföy and Bulls will run their own liquidations, starting with money market funds and then in descending order of investor numbers. Their funds that were not liquidated but were closed for trading on TEFAS may reopen afterwards, and some may reopen earlier, on terms set by the manager.
Accounts for returning excess gains. Voluntary return accounts (İsteğe Bağlı İade Hesapları) have been opened at Birleşik Fon Bankası in the name of the Savings Deposit Insurance Fund (TMSF), one per affected fund, for gains made by selling units before the liquidation decision. The money goes only to that fund's liquidation estate and then to the liquidating banks, Ziraat and İş Bankası. A separate account covers excess profits from share trading.
Tera Yatırım suspended. The capital market activities of the brokerage Tera Yatırım Menkul Değerler were suspended as of 30 September, 18:10 (not to be confused with Tera Yatırım Bankası from our previous update). Three responsible staff lost their licences permanently, and Borsa Istanbul moved the company's shares to the close watch market.
Other sanctions. In the Borlease Otomotiv case, eight individuals were fined nearly TRY 3 billion in total for late or missing reports on whether the assumptions behind the IPO price had materialised. Three websites are being blocked for unlicensed capital market activity.
Market. On 1 October BIST 100 rose 2.5% to 12,249, with banks up more than 3%. It is the first meaningful relief after a September in which, by market estimates, Borsa Istanbul capitalisation fell about 20%, the worst month since 2008. The Fund Coordination Board holds its second meeting on 2 October.
Our analysis
From procedure to cash. In our seventh update we noted that no payout date had been set. Now there is a mechanism. For most small investors the interim payment effectively settles the matter: TRY 1 million is about USD 20,400 per fund at the current rate.
The base is money invested, not unit value. As the term suggests, the net investment amount is what an investor put in minus what was already taken out. Paper gains from inflated unit prices are not paid now; they depend on what the final liquidation recovers.
Per-fund cap. Holders of several funds receive several payments. The decision covers all unit holders without distinguishing individuals from companies, but for companies that kept treasury balances in money market funds it is partial relief, not a solution.
Three speeds. Small balances in the four managers' funds come back fast, amounts above the cap wait for asset sales, and the three self-liquidating managers have announced no interim payment. In our assessment, final losses are more likely in hedge-type funds (serbest fonlar) than in money market funds.
Early exits under scrutiny. Until now, fines and amnesty proceeds went to the budget. Now there is a channel that sends money back to the affected funds. Returns are voluntary today. In our view, the question of who exited with large gains before 17 September remains open, and the next step may not be voluntary.
Pressure moves to intermediaries. The review now covers the whole chain: asset manager, broker, bank and related issuers. Client securities in Turkey are held at MKK in investors' own accounts, separate from the broker's assets, so for Tera Yatırım clients the practical step is a transfer to another intermediary.
A bottom, not a turnaround. The market read the decision as the first concrete step. Liquidity pressure will ease, but in our assessment confidence in funds will take months, not weeks, to rebuild.
What to do now
Holders of Tera, Pusula, Atlas and Hedef funds: confirm with your bank or broker that your reconciliation is complete, since without it there is no interim payment. List every fund you hold: the TRY 1 million cap applies to each separately.
Holders of A1 Capital, Pardus and Bulls funds: follow the liquidation schedule, and check whether you hold funds of these managers that are closed on TEFAS but not liquidating, as they may reopen sooner.
Companies with liquidity in funds: book the interim payment as a partial settlement of the claim, not a sale, and rebuild the cash plan, since amounts above the cap will not return in the coming weeks.
Investors who exited with large gains before the liquidation decision: assess your position now, while returns are voluntary.
Tera Yatırım clients: start a securities transfer and keep account statements as of the suspension date.
Units frozen or company cash stuck in a liquidating fund? Contact us.