What Is a Fund?
A mutual fund — in Türkiye simply "fon" in everyday speech — is a collective investment vehicle in which the money of many investors is pooled and spread by a professional portfolio management company across assets such as stocks, bonds, or gold. The investor buys units of this pool; the unit's value is recalculated every day from the value of what the pool holds. In Türkiye funds are established under CMB (SPK) supervision, and most are bought and sold through TEFAS.
How a fund works
A fund is founded by a portfolio management company. Under Capital Markets Law No. 6362 a fund has no legal personality: it is a pool of assets managed on behalf of investors on fiduciary ownership principles. That pool is kept separate from the founder's own books. The law states that fund assets cannot be attached, cannot be pledged, and cannot be included in the founder's bankruptcy estate. The assets are also held by an independent portfolio custodian. If the founder fails, the assets inside the fund do not go to the founder's creditors.
What the investor buys is called a participation unit (katılma payı). Every unit has a price: the unit price / NAV per unit. The arithmetic is simple — the fund's total value is divided by the number of units in circulation. The regulation makes daily calculation and announcement of this value the rule (III-52.1, art. 14). A purchase order is divided by the calculated price to determine how many units it buys.
Most funds use forward pricing: when the order is placed, the price at which it will execute is not yet known; the order is filled at the first price calculated after the order is given. Money market funds and short-term debt instrument funds are the exception; in those, orders execute at the last announced unit price. For cut-off times and settlement (valör) differences, see the fund trading hours page.
How a fund makes money
A fund has no return-generating mechanism of its own; it carries the value of whatever is inside it. If the stocks in the portfolio rise, the bonds accrue interest, or the gold appreciates, the fund's total value increases and the unit price rises with it. The investor's gain is the difference between the price paid and the price received. Most funds in Türkiye do not distribute interest and dividend income but reinvest it into the portfolio, so the return accumulates in the price itself.
The same mechanism works in reverse. If the assets in the portfolio lose value, the unit price falls and the investor may sell for less than they paid. A fund is not a deposit that protects principal: no fund undertakes to repay principal or to deliver a return. In guaranteed funds a guarantor guarantees some or all of the principal and/or return, and the scope, conditions, and identity of the guarantor are set out in the prospectus. Protection-oriented funds carry no guarantee at all — protection there is only a best-efforts aim and may not be achieved. Past returns are not an indicator of the future.
Diversification here is not a matter of style but part of the rule: no more than 10% of a fund's total value may be invested in the money and capital market instruments of a single issuer (art. 17). This limit prevents the collapse of a single company from wiping out the fund; it makes no claim to protect when the whole market falls together. Hedge funds (serbest fon) are outside these portfolio limits (art. 25).
Fund types
Type is defined by what the portfolio is permanently allocated to (III-52.1, art. 6) and is stated in the fund's name. The type in the name tells you what the fund is obliged to do.
Money market fund
The entire portfolio consists of highly liquid money and capital market instruments with at most 184 days to maturity; the portfolio's daily-calculated weighted average maturity is at most 45 days. Colloquially also called a "liquid fund". → What is a money market fund · Money market funds
Equity fund
At least 80% of the fund's total value is continuously invested in the shares of domestic and/or foreign issuers. The phrase "equity-intensive fund" (hisse senedi yoğun fon) in a fund's name is a separate definition: it describes funds where at least 80% of the fund's portfolio value consists continuously of issuer shares traded on Borsa İstanbul, excluding securities investment trust shares. → What is an equity fund · Equity funds
Debt instrument fund
At least 80% of the fund's total value is continuously held in domestic and/or foreign, public and/or private sector debt instruments — bonds and bills. Those concentrating on foreign-currency bonds issued abroad are known as Eurobond funds. → Eurobond funds
Precious metals fund
At least 80% of the fund's total value is continuously invested in exchange-traded gold and other precious metals, or in money and capital market instruments based on them. → Gold funds
Participation fund
The entire portfolio consists continuously of lease certificates (sukuk), participation accounts, equity shares, gold, and other non-interest-based instruments deemed appropriate by the Board. → What is a participation fund · Participation funds
Variable fund
A fund that, in terms of portfolio limits, falls into none of the types above; its allocation may change over time. → What is a variable fund
Exchange-traded fund (BYF)
A fund whose units trade on the exchange intraday, like a stock; it is subject to a separate regulation (III-52.2). → What is an ETF · Exchange-traded funds
Hedge fund (serbest fon)
A fund established for its units to be sold only to qualified investors. The portfolio limits and the maximum expense ratio rule do not apply to these funds. → What is a hedge fund · Hedge funds
What a fund costs
A fund's cost is not billed to the investor separately; it is deducted directly from the fund's assets. Reported return figures already include that deduction. A cost is not absent just because it is invisible.
- Management fee: what the portfolio management company charges for managing the fund. It is defined as an annual percentage and deducted daily from the fund's total value. The regulation requires it to be disclosed on the founder's website and on KAP.
- Total expense ratio (TER): the sum of all expenses listed in the prospectus — management fee plus custody, audit, registration, and announcement costs. This is the right figure for comparing the cost of two funds.
- Entry/exit commission: may be applied in some funds (art. 16). If it exists, it is stated in the information documents.
- Performance fee: in some funds, an extra fee taken from returns above a defined threshold.
Article 33 of III-52.1 caps the total of expenses met by the fund, by fund type (Annex-4). The founder must check every three months whether the cap has been exceeded and refund any excess to the fund. Withholding tax (stopaj) is also deducted from gains; the rate varies by fund type and conditions and can be updated by Presidential decree, so the rate in force should be confirmed from official sources.
Every fund's key investor information form and prospectus are published on KAP. Fees, strategy, and risk profile are stated there.
Frequently asked questions
what is a bank fund?
In everyday speech, funds sold through a bank's branch or app are called "bank funds". No such fund type exists in the regulation. In Türkiye only a portfolio management company may found a fund (Law No. 6362); banks cannot. What people call a "bank fund" is usually a fund founded by the portfolio management company in the same group as that bank and offered through the bank as a distribution channel. The fund's actual type, strategy, and cost are stated in its name and in its key investor information form; the bank's name says nothing about them.
is buying a fund a good idea?
There is no single answer, and it cannot be given here; it varies from person to person. What determines the answer: how long the money can stay committed, how much loss of value can be tolerated, the fund's cost (total expense ratio), how tax works, and what the person already holds. A fund is an instrument that may or may not fit those factors; it is not inherently good or bad. Fon.org.tr shows fund data; it does not give investment advice.
what is a fund and how do you buy one?
A fund is a collective investment vehicle that pools investors' money and spreads it across assets under professional management. Buying is done through an investment account at a bank or brokerage: pick the fund, enter the amount, place the order. Most funds are connected to TEFAS, which lets an investor with an account at one institution reach funds from other institutions too. Hedge fund (serbest fon) units may be sold only to qualified investors. The price at which an order executes depends on the fund's type and the time the order was placed.
what is a daily fund?
"Daily fund" is not a regulatory term; it usually means a money market fund (colloquially a "liquid fund"). A money market fund's entire portfolio consists of highly liquid instruments with at most 184 days to maturity, and the portfolio's weighted average maturity is at most 45 days. In these funds, unlike others, orders execute at the last announced unit price — which is where the "daily" impression comes from. Its value is still not fixed.
do funds make money?
A fund has no gain-generating mechanism of its own; it carries the value of the assets inside it. If the stocks, bonds, or gold in the portfolio gain value, the unit price rises; if they lose value, it falls. So a fund can gain and it can lose. What determines the outcome is what the fund holds, which period you look at, and the expenses deducted. Past returns are not an indicator of the future, and no fund can promise a return. Guaranteed funds may carry a guarantor's guarantee whose scope is defined in the prospectus; protection-oriented funds carry no guarantee — only a best-efforts aim to protect, which may not be achieved.
what is a fund purchase?
A fund purchase is buying units of a fund; what lands in the account afterwards is not cash but units of that fund. Most funds use "forward pricing": when the order is placed, the execution price is not yet known; the order is filled at the first unit price calculated after the order is given. Money market and short-term debt instrument funds are the exception; they use the last announced price. The time an order is placed can change which price it meets.
In short
A fund is a way of committing money not to a single asset but to a professionally managed pool of assets. The unit's value is recalculated every day along with what is inside the pool, which is why it rises and falls. Understanding a fund takes three things: what it holds (its type), how much it deducts (the total expense ratio), and how it behaved in which past period. All three are stated plainly in the fund's name, its key investor information form, and TEFAS data.