What is Mutual Fund?
Mutual funds manage the portfolios consisting of capital market instruments such as shares and bonds and of precious metals in return for the money they collect from public. Each investor becomes a shareholder getting a Participation Certificate representing part of the portfolio purchased by that shareholder.
What are the Legal Basis of the Formation and Progress of the Funds?
Funds are formed and operated in accordance with the principles of announcement made by Capital Markets board of Turkey (CMB) and based on this law. All issues relevant to the establishment and progress of the funds are available in the funds by-laws in detail. Investors may, if they wish, demand the fund by-laws from the founder for review.
Who may establish an mutual Fund?
According to the rules set by Capital Markets Board, banks, insurance companies, Non-bank intermediaries, unemployment funds and pension funds may establish mutual funds.
On which Assets Can the Mutual Fund Invest?
Stocks (except the founder/manager) treasury bills, government bonds, repos, private sector bonds, investment funds, precious metals, futures, forwards, options and foreign securities.
Distinction between Founder, Manager and Safe Keeper of mutual Funds
- The founder undertakes the initial establishment and Capital Markets Board registry of the mutual fund.
- The manager undertakes the mutual fund asset management.
- The "Safe Keeper ensures the safe preservation of the mutual fund assets and carried out the asset - cash exchange."
How are the Mutual Funds Managed?
- The portfolio manager carries out transactions in the market relevant to the mutual fund assets for stable revenue and high performance targets.
- The research department provides the research support required to ensure profitable transactions by the portfolio managers.
- The Investment Committee monitors the performance of the portfolio managers and determines the general principles of the fund asset management upon decisions made as per the economical conjuncture.
- The Fund Board of Directors closely monitors the success graphics and fund performance of the manager in comparison with further companies in the sector.
What do A-Type and B-Type Funds mean?
Mutual funds are divided into two as A and B-Type. Funds invested on the stocks of partnerships established in Turkey on a continuous monthly basis at 25% of the portfolio value are called A-Type funds. B-Type funds do not require the aforesaid conditions.
What are the Fund Types?
Under the general distinction of "A" of which the portfolio contains minimum 25% stocks and "B" which is not required to contain any stock, mutual funds are usually defined as per the type of security on which they are investing.
Funds can be established in the following groups;
When the funds constantly invest at least 51% of its portfolio:
Funds that consist of at least of any two stocks, debt instruments, gold and other precious metals and capital markets instruments issued on the basis of the said metals,and value of any one is not exceeding 20% of the portfolio value, "Balanced fund"
Funds with a portfolio consisting mainly of capital market instruments with high liquidity having a maximum of 180 days to maturity and not to exceed average of 45 days maturity, "Money Market Fund"
Funds that do not belong to any of the above types of funds with respect to portfolio restrictions " Variable Fund"
When the funds constantly invest at least 80% of its portfolio:
In all of securities under the index or a sampled selection of them, where the correlation coefficient is at least 90% between the unit share value of the fund and the index value of an index taken as the basis and accepted by the Board "Index Funds"
Funds can be established in the following groups;
When the funds constantly invest at least 51% of its portfolio:
- In public and/or private sector debt instruments, " Bonds and Bills Fund"
- In stocks of the incorporations established in Turkey, "Equity Fund"
- In securities of the incorporations within a certain industry (such as cement, textile,etc.), "Sector Fund"
- In securities issued by the participations of the founder, "Participation Fund"
- In securities of a certain group (such as Sabancı Group) "Group Fund"
- In foreign public and/or private sector securities, " Foreign Securities Mutual Fund,"
Funds that consist of at least of any two stocks, debt instruments, gold and other precious metals and capital markets instruments issued on the basis of the said metals,and value of any one is not exceeding 20% of the portfolio value, "Balanced fund"
Funds with a portfolio consisting mainly of capital market instruments with high liquidity having a maximum of 180 days to maturity and not to exceed average of 45 days maturity, "Money Market Fund"
Funds that do not belong to any of the above types of funds with respect to portfolio restrictions " Variable Fund"
When the funds constantly invest at least 80% of its portfolio:
In all of securities under the index or a sampled selection of them, where the correlation coefficient is at least 90% between the unit share value of the fund and the index value of an index taken as the basis and accepted by the Board "Index Funds"
What are the Rules of Mutual Fund Management?
Management of the mutual funds has been subjected to numerous consumer protective restrictions applied by the legislation, to which the fund founder and managers must comply. The major restrictions are given below.
For each fund, the founder of the mutual fund must assign at least one auditor with specific qualifications. In addition, mutual funds are inspected by Independent External Audit Companies, in accordance with a contract, on a semiannual and annual basis.
Submission of the Annual Audit Report to the Capital Markets Board.
The Board is entitled to audit the mutual funds at any time.
- The manager can not buy assets above market value for the fund portfolio and sell assets under market value from the fund portfolio
- It is obligatory that sale and purchase of assets traded on stock exchange shall be made through the stock exchange
- More than 10% of portfolio value of mutual funds can not be invested in the securities of a single corporation
- No fund may transact any open sales or loan security purchase.
- Mutual fund assets may not be pledged and/or transferred.
For each fund, the founder of the mutual fund must assign at least one auditor with specific qualifications. In addition, mutual funds are inspected by Independent External Audit Companies, in accordance with a contract, on a semiannual and annual basis.
Submission of the Annual Audit Report to the Capital Markets Board.
The Board is entitled to audit the mutual funds at any time.
How Are the Mutual Fund Portfolio Kept? Where and How are the Assets Maintained?
The founder is responsible for the protection and safekeeping of the fund's assets. Although the fund is not a legal entity, the assets of the fund are completely separate from those of the founder. Further, in accordance with the Capital Market Law, The assets of the fund cannot be subject to any mortgage or offered as a security against any debt or seized by third persons.
The securities of the fund are kept at Takasbank A.Ş. (The Istanbul Stock Exchange (ISE) Settlement and Custody Bank,Inc.) and international clearance houses. Stocks, repos, bills and bonds are kept at Takasbank AŞ where each fund has a separate account in custody and foreign securities are kept at the international clearance houses.
The securities of the fund are kept at Takasbank A.Ş. (The Istanbul Stock Exchange (ISE) Settlement and Custody Bank,Inc.) and international clearance houses. Stocks, repos, bills and bonds are kept at Takasbank AŞ where each fund has a separate account in custody and foreign securities are kept at the international clearance houses.
Of what does the Mutual Fund Income consist?
Mutual funds acquire their income from the sales / purchase profits and dividend and interests of the assets available in their portfolio.
In addition, the increase of the market value of the securities in their portfolio, result in the increase of the portfolio and consequently, the increase of the share value.
In addition, the increase of the market value of the securities in their portfolio, result in the increase of the portfolio and consequently, the increase of the share value.
Of what do the Mutual Fund Expenses consist?
The mutual fund expenses are divided into two groups:
- Fund management fees that are paid to the founder of the mutual fund in return for the management of the fund and calculated on a daily basis in an amount equal to a certain rate of the total value of the fund.
- The registration and official announcement expenses of the fund, buying and selling, Safe custody fees and commissions and independent audit fees.
How are Mutual Funds Valued?
All assets in the mutual fund portfolio are appraised at the end of every business day, with the appraisal based on average prices of the markets where the assets are traded only the valuation of the index funds is made over the closing prices.
What is the Participation Certificate?
Participation Certificate is a certificate that represents the rights and the amount of the units the investors have on the fund. In this context, Participation certificates may be deemed similar to corporate shares. The only difference is that shareholders of a company can participate in the management of their company, while the holders of a Participation Certificate cannot participate in the management of the mutual fund.
What Mutual Fund related Information may be requested from the Company?
The detailed information relating to a mutual fund can be obtained from internal by-law, representation, circular, financial statements and monthly reports. These documents may be obtained from the places where funds are purchased and sold and the web sites of fund founders.
Internal By-Laws: These have the nature of a contract made between the holder of the participation certificate of a mutual fund and the founder of the fund, safe custody and manager, setting out the terms and conditions relevant to the management and safe keeping of the portfolio. They are announced at the Turkish Trade Registry Gazette.
Representation; Is the fund's sales document and contains basic fund related information. It is announced at the Turkish Trade Registry Gazette.
Circular: This document too contains basic information relating to the mutual fund and is announced by the Turkish publications of at least two national newspapers before the supply to the public.
Financial Statements of the Mutual Fund: They consist of the balance sheets, income tables and the tables of the total fund value reports of the mutual funds, issued in comparison with the previous fiscal year as well as the independent auditor reports of such tables. It is announced at the Turkish Trade Registry Gazette.
Monthly Report: It contains the monthly security movements and fund performance related information. It is issued within 15 days as of the end of its respective month and kept ready for review by the investors at the head office of the founder of the fund and the places where participation certificate is sold.
Internal By-Laws: These have the nature of a contract made between the holder of the participation certificate of a mutual fund and the founder of the fund, safe custody and manager, setting out the terms and conditions relevant to the management and safe keeping of the portfolio. They are announced at the Turkish Trade Registry Gazette.
Representation; Is the fund's sales document and contains basic fund related information. It is announced at the Turkish Trade Registry Gazette.
Circular: This document too contains basic information relating to the mutual fund and is announced by the Turkish publications of at least two national newspapers before the supply to the public.
Financial Statements of the Mutual Fund: They consist of the balance sheets, income tables and the tables of the total fund value reports of the mutual funds, issued in comparison with the previous fiscal year as well as the independent auditor reports of such tables. It is announced at the Turkish Trade Registry Gazette.
Monthly Report: It contains the monthly security movements and fund performance related information. It is issued within 15 days as of the end of its respective month and kept ready for review by the investors at the head office of the founder of the fund and the places where participation certificate is sold.
What are the advantages of Mutual Funds?
Professional Management: Mutual funds are managed by professional managers monitoring the markets on a regular basis with minimum risk and maximum return principle. The preferential rights of the investment instruments, their dividends and maturity follow ups are processed by professional managers.
Risk-Distribution: Mutual funds consist of various investment instruments such as treasury bonds and bills, private sector borrowing instruments, stocks and repos. Asset allocation strategy of the mutual fund is the main factor of the portfolio management process. Consequently, the investor is protected against any possible risks that may caused by a single investment instrument.
Diversity: Investors may invest on various funds formed by different asset allocation compositions as per their own investment preference and risk profile.
Cash-Convertibility: Mutual funds may be easily and rapidly converted to cash together with their processed revenue.
Large Scale Investment Benefit: By purchasing an mutual fund, you will have valued your money in accordance a large scale investor profile. Thus, small investors may acquire the investment benefits of a large scale investor.
Risk-Distribution: Mutual funds consist of various investment instruments such as treasury bonds and bills, private sector borrowing instruments, stocks and repos. Asset allocation strategy of the mutual fund is the main factor of the portfolio management process. Consequently, the investor is protected against any possible risks that may caused by a single investment instrument.
Diversity: Investors may invest on various funds formed by different asset allocation compositions as per their own investment preference and risk profile.
Cash-Convertibility: Mutual funds may be easily and rapidly converted to cash together with their processed revenue.
Large Scale Investment Benefit: By purchasing an mutual fund, you will have valued your money in accordance a large scale investor profile. Thus, small investors may acquire the investment benefits of a large scale investor.
Important Notes on the Key Pints during Investment on the Mutual Funds?
Please bear in mind that depending on their type,mutual funds too bear various risks at different levels. Usually, high potential revenue means high potential risk. Therefore, an mutual fund type (A or B) or kind (Equity , Bills&Bonds , Money Market Variable Fund, etc.) that complies with personal expectations of revenue and risk should be preferred.
The past performance of the funds contained in the chosen mutual fund should be reviewed.
Information as to the amount of profit yielded by the mutual Funds on daily, weekly, or annual basis may be demanded from the founder and are published at the newspapers and magazines as well. However, although the past performance of the mutual fund is an important indicator, there is no future warranty of the same amount of profit.
The daily price and performance fluctuations should not affect the mutual fund preference. Particularly, mutual funds that contain stocks should be considered as medium and long-term investment instruments.
The institution from which funds will be purchase should be asked for the mutual fund related resources and information relevant to the fund investment and management strategies.
Important Notes on the Choice between mutual Fund Types
Taking into consideration of the following criteria would be useful when making a choice between the mutual funds available in the market.
A and B-Type fund share sales and purchase instructions can be given at Akbank branch offices during working hours and through external channels for 24 hours. All investment funds except Akbank B-Type Money Market Fund are subject to future pricing method. Any purchase demands forwarded until 13:30 hrs (12:00 for B Type Gold Fund) during working days for future pricing funds are included in the fund for the following working day over the prices occurred at the evening of the same day. All purchase notices given after 13:30 (12:00 for B Type Gold Fund) are included in the fund after two working days over the prices that occur at the evening of the next working day.
During notice, the investor pays the investment amount in cash. Such amount is subjected to interest in the Akbank B-Type Money market Fund until the participation shares are charged to the participant's account. Any sales instructions given until 13:30 hrs (12:00 for B Type Gold Fund) are fulfilled over the price that occurs at the evening of the same day. The investor may leave the fund after one working day for B-Type Funds and two working days for A-Type Funds. The investor may leave the fund over the price formed at the end of the next working day, after two working days for B-Type and 3 working days for A-Type Funds.
The past performance of the funds contained in the chosen mutual fund should be reviewed.
Information as to the amount of profit yielded by the mutual Funds on daily, weekly, or annual basis may be demanded from the founder and are published at the newspapers and magazines as well. However, although the past performance of the mutual fund is an important indicator, there is no future warranty of the same amount of profit.
The daily price and performance fluctuations should not affect the mutual fund preference. Particularly, mutual funds that contain stocks should be considered as medium and long-term investment instruments.
The institution from which funds will be purchase should be asked for the mutual fund related resources and information relevant to the fund investment and management strategies.
Important Notes on the Choice between mutual Fund Types
Taking into consideration of the following criteria would be useful when making a choice between the mutual funds available in the market.
- Fund profit, the founder of the fund as well as the kind and types of the funds managed by the founder,
- The fund's nearest portfolio compound, the portfolio manager managing the fund portfolio,
- The founder's past success in terms of fund types and its success in comparison to other funds of the same type,
- Sales and purchase locations of fund participation certificates and transaction hours,
- Whether or not the cash conversion of the Participation Certificate requires the condition of prior notice.
A and B-Type fund share sales and purchase instructions can be given at Akbank branch offices during working hours and through external channels for 24 hours. All investment funds except Akbank B-Type Money Market Fund are subject to future pricing method. Any purchase demands forwarded until 13:30 hrs (12:00 for B Type Gold Fund) during working days for future pricing funds are included in the fund for the following working day over the prices occurred at the evening of the same day. All purchase notices given after 13:30 (12:00 for B Type Gold Fund) are included in the fund after two working days over the prices that occur at the evening of the next working day.
During notice, the investor pays the investment amount in cash. Such amount is subjected to interest in the Akbank B-Type Money market Fund until the participation shares are charged to the participant's account. Any sales instructions given until 13:30 hrs (12:00 for B Type Gold Fund) are fulfilled over the price that occurs at the evening of the same day. The investor may leave the fund after one working day for B-Type Funds and two working days for A-Type Funds. The investor may leave the fund over the price formed at the end of the next working day, after two working days for B-Type and 3 working days for A-Type Funds.
