"Nerves on Edge": Nearly Half a Million Investors Have Been Affected by the Collapse of Funds in Turkey

The funds of 455,758 investors have been frozen in equity and money market funds that Turkish regulators have ordered to be liquidated. Bloomberg reports the latest figures on those affected, citing the Turkish Capital Markets Board. It is not yet clear what portion of their investments will be recovered, the agency writes.

Some investors realized that astronomical returns could not be sustainable and managed to exit before the crash. According to data from the analytical platforms Fonbul and Fintables, outflows from funds totaled approximately 600 billion lira ($12.3 billion) from August 31 to September 23. However, many investors, lacking a clear understanding of the risks, jumped on the market’s rally too late in the hope of protecting their savings from inflation, which had exceeded 50% in Turkey for three consecutive years. Bloomberg spoke with some of them, and here’s what they had to say:

Just two weeks before the crash, 28-year-old unemployed Mehmet Kervanci, on the advice of a relative, invested his wedding savings—2.5 million liras ($51,000)—in a rapidly growing fund. According to him, bank deposits weren’t yielding good returns, so he was looking for other places to invest his money. When the stock market crashed, Kervanchi tried to withdraw his money but was unable to do so. “When the sell order didn’t go through, we started to panic,” he told Bloomberg, adding that he is “in despair.”

Another investor, who asked to remain anonymous, said he had invested 2.3 million liras ($47,000) in two funds managed by Tera, hoping to save up for a down payment on a house. Now, he said, he has to worry about how he’ll pay next month’s rent. “All the stocks are falling every day,” he said. “Who in their right mind would buy them so we can get our money back?”

What was particularly painful for the 30-year-old investor was that he had invested in the funds money from the sale of gold he had received as a wedding gift. “It’s driving me crazy. I haven’t been able to eat properly for several days now,” he said.

Emil Gyurol Aküz, a university graduate who is currently looking for a job, converted 2.4 million liras ($49,000) worth of gold into two Tera equity funds at the end of August, hoping to protect his savings from a drop in the price of gold. “My nerves are on edge. I’m not sleeping—barely two or three hours a day,” he said.

Latif Ersoy, an entrepreneur from Istanbul, invested about 300,000 liras ($6,000) in three funds managed by Pusula at the beginning of the year. He emphasizes that the funds were approved for trading by the regulator. Having lost 90% of his initial investment, the investor admitted, “It doesn’t matter anymore whether I get my money back.”

Last week, the BIST 100, Turkey’s main stock index, lost more than 8%. On September 16, stocks experienced their biggest drop in more than a year. Panic in the market began after a number of funds, including those managed by Tera Portföy and Pusula Portföy, faced difficulties making payments to investors who were trying to withdraw their money. On September 17, authorities ordered the liquidation of more than 130 troubled funds. The chairman of the board of directors of the brokerage firm Tera—whose stock has risen by nearly 40,000% since 2022—was arrested.

This article was AI-translated and verified by a human editor