Türkiye’s investment fund sector faces a deepening crisis after regulators last month ordered the liquidation of 131 funds managed by seven asset managers following warnings by some that they could not meet redemption payments.
The funds had reached more than $20 billion in assets over just three years, as nearly half a million investors including politicians, former officials and celebrities sought bumper returns to offset a depreciating lira and high inflation.
This expansion continued even after Turkish authorities alleged that some funds were being used for market manipulation.
The crisis dragged stocks into a bear market, with the main index having its worst month since 2008 in September.
Türkiye has 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 of the 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.
Turkish officials warned about manipulation through investment funds in November 2025.
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