Turkish regulators order liquidation of 131 investment funds amidst liquidity crisis

Turkish regulatory authorities have ordered the liquidation of 131 investment funds managed by seven asset management firms following a severe liquidity crisis. The decision comes as the firms failed to meet redemption requests from investors, who had flocked to these funds seeking high returns to hedge against the country's persistent inflation and currency devaluation.

Over the past three years, the assets under management for these specific funds ballooned to over $20 billion, drawing nearly half a million investors, including politicians and celebrities. The wider industry reached $329 billion in August 2026, up from $246 billion the previous year. A notable case mentioned by Reuters is a Tera Portföy fund, which claimed cumulative returns exceeding 15,000% while managing nearly $5 billion. The crisis escalated when investors began mass liquidations, forcing the funds to offload holdings in less liquid, small-cap stocks.

This turbulence has significantly impacted the broader market, with the main stock index recording its worst monthly performance in September since 2008. While authorities previously alleged market manipulation within the sector, the current liquidity crunch has halted operations for the affected funds. Investigations into the management practices and the underlying causes of these failures are ongoing.