How Turkey's investment fund bubble burst
TUR•Regulators ordered the liquidation of 131 funds managed by seven asset managers after warnings they might not meet redemptions. The funds had more than $20 billion in assets, and JPMorgan analysts said the turmoil posed meaningful downside risks to Turkey's 2026 GDP growth forecast of 3%.
1. Rapid fund expansion
Turkey’s investment fund sector faces a deepening crisis after regulators ordered 131 funds managed by seven asset managers to be liquidated. The funds had grown to more than $20 billion in assets over three years as nearly half a million investors sought returns to offset a depreciating lira and high inflation. Some funds concentrated investments in single assets or traded thinly traded small-cap shares.
2. Investigation and repayments
Turkey’s Justice Minister Akin Gurlek said the number of suspects in an expanded investigation into suspected market manipulation had risen to 217, with 56 jailed pending trial. The Capital Markets Board said liquidation would take six months; investors with net investments below 1 million lira in certain funds will receive full repayment, while those with 1 million lira or more will receive an interim payment of 1 million lira.
3. Market and growth concerns
Turkey’s main index closed 2.5% higher on Thursday after changes removed stocks caught up in the crisis. JPMorgan analysts said the turmoil brought “meaningful downside risks” to their 3% forecast for Turkey’s 2026 GDP growth. The total loss to investors remains unclear, with thinly traded fund assets potentially complicating conversion to cash.
