Türkiye’s investment funds soar amid inflation measures
Turkish lira banknotes are seen in this illustration taken in Istanbul, Turkey November 23, 2021. (Reuters Photo)
In response to inflation control measures and strict monetary policies, Türkiye’s real-value Turkish lira policy has increased domestic investments in Turkish lira-denominated assets.
Investors unable to find attractive interest rates in Turkish lira deposits have turned to investment funds.
What happened:
- Rise in investment funds: As of August 2024, the number of individuals investing in Turkish investment funds surged by 1.173 million, reaching 5.227 million. These funds’ portfolio sizes skyrocketed from ₺1.44 trillion (approximately $42.3 billion) to ₺3.6 trillion (approximately $105.7 billion) in a year.
- Investor preferences shift: In response to inflation control and strict monetary policies, Turkish investors are switching from TL deposits to investment funds because of insufficient interest rates in traditional deposits.
| Date | Number of Fund Investors | Portfolio Size (₺) | Portfolio Size (USD) |
|---|---|---|---|
| March 2023 | 3,711,863 | ₺932.5 billion | ~$27.4 billion |
| June 2023 | 3,875,515 | ₺1.136 trillion | ~$33.8 billion |
| August 2023 | 4,053,921 | ₺1.444 trillion | ~$42.4 billion |
| August 2024 | 5,227,508 | ₺3.6 trillion | ~$105.7 billion |
| September 9, 2024 | 5,285,562 | ₺3.75 trillion | ~$110.8 billion |
Why it matters:
- Historical Growth: The increase marks a significant historical peak. For comparison, in June 2023, fund investors numbered 3.875 million with a portfolio size of ₺1.136 trillion (approx. $33.8 billion). By August 2024, investor numbers had risen to 5.228 million with a portfolio size of ₺3.596 trillion (approx. $105.6 billion).
- Sector Implications: Fund managers note that despite rapid growth, the portfolio size still represents only about 15% of Türkiye’s GDP, while globally, it’s over 20%. This suggests considerable growth potential for Türkiye’s investment funds.
What’s next:
- Digital transformation: Türkiye has introduced digital portfolio management services through Akbank Mobile, enabling investors to manage portfolios digitally and expand access to investment management.
- Central bank impact: Measures to withdraw excess liquidity from the market are boosting money market funds, which are now offering gross returns of 45-50%.
Key figures:
- In August 2024, the portfolio of investment funds reached ₺3.6 trillion (approximately $105.7 billion).
- On September 9, 2024, the portfolio of investment funds increased to ₺3.75 trillion (approximately $110.8 billion), with 5.286 million investors involved.
