Turkey pays out fund investors in the dark as asset sales await buyers

Turkey has started repaying investors in its collapsed funds without knowing what the assets behind them will sell for. Securities regulator SPK approved interim payments of up to TRY 1 mn (USD 20.4k) per investor in funds run by Tera, Pusula, Atlas, and Hedef, starting with money market funds. Anyone with less than TRY 1 mn of net investment gets it back in full. Everyone above that line gets TRY 1 mn now and waits for Isbank and state-owned Ziraat Bank, which are supervising the asset sales, to find buyers for portfolios full of thinly traded small-caps.

Ankara also wants investors who sold before the freeze to return their gains. The Savings Deposit Ins. Fund has opened accounts for investors who sold out before the freeze to voluntarily return their profits, according to Bloomberg. A coordination board chaired by Vice President Cevdet Yilmaz met for the second time on Friday to work through a payment timetable and changes to the capital markets law.

The liquidation covers 131 funds run by seven managers, with 455.8k investors and some USD 18 bn in assets by SPK’s count. Reuters puts the figure above USD 20 bn. The regulator has already doubled the wind-down period to six months to avoid forced selling. Many of the holdings are small-caps whose marked prices were set in a market the funds themselves dominated.

Tera Portfoy and Pusula Portfoy account for most of it. Tera’s assets rose more than tenfold to USD 14.3 bn over the year to August, and Pusula’s rose 13-fold to USD 13.2 bn, making them the sixth and eighth largest asset managers in Turkey and the biggest outside the banks, Reuters says. Tera’s TRY hedge fund, the largest being liquidated at USD 5 bn and 102.6k investors, had reported a cumulative TRY return above 15k%.

The regulator’s own rules set off the run. The SPK capped how much a fund could hold in a single company in late August; funds began selling to comply, and investors rushed to redeem, Turkish Minute reports. Pusula missed redemptions on 15 September, and the liquidation order came two days later. Finance Minister Mehmet Simsek had said publicly in November 2025 that manipulation was running through certain funds.

The damage has reached the wider economy: The main Istanbul index had its worst month since 2008 in September, and central bank reserves fell USD 4.3 bn to USD 174.4 bn in the week of the run, marking a fourth straight weekly drop. JPMorgan sees “meaningful downside risks” to its 3% growth forecast for Turkey this year, Reuters reports. The index closed 2.5% higher on Thursday after the stocks at the center of the probe were removed from it.

The criminal probe keeps widening. Courts jailed another 20 people over the weekend, bringing the total to 85 across the fund and related stock manipulation cases, among them Tera Chairman Emre Tezmen, Pusula Holding Chairman Serdar Turhan, and former central bank deputy governor Erkan Kilimci. Fatma Betul Sayan Kaya, a deputy chair of the ruling AKP, resigned from her positions in the party over allegations around stock trading that also involved her husband.

MARKETS THIS MORNING-

Asian markets opened in the green earlier today, with Japan’s Nikkei rising around 2.3% amid a rally in tech shares, while MSCI’s Asia Pacific equities index gained 0.5%. South Korean markets are closed for a holiday.

THE CLOSING BELL-

The ADX fell 0.3% on Friday on turnover of AED 710.8 mn. The index is down 0.2% YTD.

In the green: Rapco Investment (+4.6%), Sharjah Cement and Industrial Development Co. (+3.6%), and Burjeel Holdings (+3.4%).

In the red: Abu Dhabi National Hotels Co. (-2.1%), Al Buhaira National Ins. Company (-2.0%), and Gulf Cement Co. (-1.8%).

Over on the DFM, the index fell 0.5% on turnover of AED 381.4 mn. Meanwhile, Nasdaq Dubai was down 0.5%.