Turkey considers pooling frozen assets to repay investors after $18B fund crisis

Turkey’s Capital Markets Board, known as the SPK, has kicked off the liquidation of 131 investment funds after a cascade of redemption failures exposed deep cracks in the country’s fund management industry. The assets involved total roughly $18.3 billion, or about 890 billion Turkish lira, and approximately 350,000 investors are now waiting to find out when, or if, they’ll get their money back. The regulator is exploring whether pooling the frozen fund assets could streamline repayment to investors. Seven portfolio management companies are caught up in the unwinding, and the SPK has tapped major Turkish banks to oversee the process. How the crisis unfolded The trouble started when Pusula Portfoy and Tera Portfoy disclosed that they could not meet investor redemption requests. Tera Portfoy alone faced collective redemption demands of roughly 300 billion lira, the equivalent of about $6.15 billion. That’s a staggering outflow for any single fund manager, let alone one operating in an emerging market. The disclosures triggered a swift market reaction. Borsa Istanbul’s benchmark index dropped 2.6% intraday as investors scrambled to assess how far the contagion might spread. Authorities...