What Is a Fund Participation Unit?

A participation unit is a capital-markets instrument that shows your share in an investment fund's portfolio. Under Communiqué III-52.1 it is defined as "a dematerialized capital-markets instrument that carries the rights the investor holds and shows participation in the fund." When you put money into a fund, the unit is what you receive in return; you become a proportional rights-holder over the assets inside the fund.

A participation unit is not a stock

This is the most common confusion: mistaking a participation unit for a company share. It is not one. Under Article 52 of Capital Markets Law 6362, an investment fund is a pool of assets collected from savers in exchange for participation units, formed on the basis of fiduciary ownership, and it has no legal personality — it is an asset pool, not a company. A fund therefore is not a corporation (şirket): it has no share capital, no shareholders' meeting and no stock in the dividend-policy sense.

A stock makes you a part-owner of a company, with a claim on its profit, its vote and its liquidation surplus. A participation unit instead makes you a co-owner not of a company but of a portfolio: your unit represents a proportional slice of the fund's basket of assets. When a fund rises or falls, that is the change in the value of the portfolio's assets flowing through to your unit.

Participation unit versus NAV per unit

This distinction is the core of the page. The two are different things:

• Participation unit = the count you own (how many units).
• NAV per unit = the price of one unit (what it is worth today).

Multiply them together and you get the current value of your investment:

Number of units × NAV per unit = the value of your holding

For example, if you hold 1,000 units and the NAV per unit that day is 4 TL, your investment is worth 4,000 TL. These figures only illustrate the formula. Under Article 14 of the Communiqué, the NAV per unit is found by dividing the fund's total value by the number of participation units, and it is calculated and announced every business day. Participation units have no nominal (face) value; their price moves with the portfolio.

How units are created and destroyed

When you buy a stock on the exchange, that share passes to you from another investor; the total number of shares does not change. In an open-ended investment fund the mechanism is different:

• When you buy, the unit is not transferred from another investor but newly issued by the fund — the number of units in circulation goes up.
• When you sell, the unit is not passed to a buyer but redeemed back to the fund (turned into cash) — the number of units in circulation goes down.

Article 15 of the Communiqué frames it this way: a unit purchase is completed by paying the price in cash, and a unit sale by redeeming the units back to the fund to convert them into cash. But this mechanism does not cover every unit: paragraph 3 of the same article lets units trade on the exchange where the prospectus allows it and the exchange approves, and paragraph 5 lets non-listed units be bought and sold off-exchange where the disclosure documents allow it — in those cases a unit changes hands between investors instead of being created and redeemed. This is exactly why an open-ended fund's size — its total value — expands and contracts with investor inflows and outflows; there is no fixed unit count.

Where units are held: dematerialized at MKK

Participation units are not printed on paper certificates. Article 13 of Law 6362 makes dematerialized (book-entry) issuance the rule — capital-markets instruments are issued electronically without paper — and the central securities depository for dematerialized instruments is the Central Securities Depository (MKK). Your units are therefore held as electronic records at MKK.

Trading: a struck valuation price, not a negotiated one

A participation unit's price is not set by negotiation. Your order executes at the fund's rule-based NAV per unit, and many funds use forward pricing: the price is not yet known when you place the order, and the trade settles at the price computed in the next valuation. You can see a fund's cutoff times and valör (how many business days until the cash reaches your account) on the Fund Trading Hours page. How easily a unit turns back into cash is the subject of liquidity.

GYF and GSYF: qualified investors only

Not every participation unit is sold to everyone. The units of real-estate investment funds (GYF) and venture-capital investment funds (GSYF) may, under their respective communiqués, be sold only to qualified investors (Article 13 of Communiqué III-52.3 for GYF, Article 13 of Communiqué III-52.4 for GSYF). This is a fundamental difference from the securities funds that are open to everyone on TEFAS. Rather than being created and redeemed, these units can be transferred between qualified investors.