Turkey’s investment funds, once celebrated for delivering returns so extreme they surprised even experienced financial professionals, have now collapsed in a crisis that left over 350,000 investors with significant losses and triggered a market-wide sell-off. The crisis began in late 2025 when authorities first raised concerns about irregular activity, but panic fully set in by mid-September as investors scrambled to withdraw their money.
Tera Portföy Yönetimi AS, one of the most aggressive firms, reported a three-year return that would have turned a ₺10,000 investment into nearly ₺6.6 million. Such figures immediately sparked skepticism among financial analysts, who had long warned that such performance was unattainable without manipulation. Yet, retail investors, drawn by the promise of rapid wealth, continued to invest heavily.
By August 2025, the Capital Markets Board (SPK) grew concerned enough to issue new guidelines to address erratic stock movements. However, the damage was already severe. Pusula Portföy Yönetimi AS, another fund, saw its asset values collapse and announced it could no longer honor redemption requests. Tera attempted to stabilize the situation by acquiring Pusula, but the move failed to restore investor confidence.
The breaking point came on September 16, when Tera froze redemptions, admitting it could not meet withdrawal demands. The immediate aftermath saw investors pull ₺213 billion (about $4.7 billion) from Turkish funds between August 31 and September 16, according to Fintables. Turkish stocks experienced their worst drop in over a year, with more than 100 shares hitting their daily trading limits.
How risky bets triggered the collapse
The funds’ strategy relied on a high-risk approach: concentrating investments in illiquid stocks with tiny free-float shares. Even small purchases could artificially inflate prices, which the funds then used as collateral to borrow short-term money. This cycle amplified the bubble until regulators tightened rules, forcing investors to sell. When prices crashed, the funds were left unable to repay their obligations.
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Regulators responded quickly. The SPK banned trading for some market participants and liquidated funds tied to seven asset managers, including Tera and Pusula. Criminal charges were filed against fund managers, with two facing two-year trading bans. The central bank intervened by increasing liquidity through weekly repo auctions and purchasing local-currency bonds to prevent borrowing costs from spiking.
By late September, the SPK expanded its crackdown, banning trading for select participants and liquidating 131 funds tied to seven asset managers. This went beyond the initial seven firms flagged earlier. The regulator’s move followed a September 17 statement from government officials, who insisted the liquidity crisis was contained and posed no systemic risk. Yet, the broader market continued to weaken, with over 100 shares in Istanbul’s main index hitting their daily trading limits and prices plunging toward the 10% regulatory cap.
Broader market contagion spreads
The fallout extended beyond retail investors. Money-market funds, which had lent billions to troubled asset managers using overvalued stocks as collateral, found themselves unable to meet redemption requests.
Tera Portföy Yönetimi AS, the largest firm involved, described the crisis as an “unprecedented speculative attack” in a statement posted on X (formerly Twitter) by its board chairman, Emre Tezmen. The firm pledged full cooperation with regulators but faced growing doubts about its ability to recover assets. Other asset managers denied liquidity issues in their statements, though their shares declined sharply. The SPK’s decision to freeze trading for certain firms showed the scale of the manipulation, with some managers now facing criminal investigations.
