Types of Stock Funds in Türkiye

It is well known that mutual funds are divided according to their investment directions into several types, some of which specialize in bonds, stocks, real estate, companies and startups, commodities, and so on. In the part of equity funds that rely on the shares of companies listed on the stock exchange, their investment activity in Turkey can be divided between many options, namely:

Local equity funds

Local funds are investment funds that invest in the Turkish Stock Exchange, in the shares of local companies listed for trading therein, which are usually characterized by a clear investment vision and the possibility of a deeper understanding of their investment path, with their contributions to supporting the country’s economy, and their availability of growth opportunities as the country’s economy improves.

 International equity funds

These are funds that invest in various global stock markets, providing investors with broad investment options in major international companies while diversifying the portfolio across many overseas markets.

Sector equity funds

This is a type of more specialized equity fund that invests in stocks of companies that specialize in specific sectors, such as energy companies, technology companies, or any specific industry.

How do stock funds work?

Equity funds operate in the same manner as their counterpart funds, where licensed funds raise their capital from individual or corporate investors, and are headed by a management team experienced in the field of trading stocks in local and international stock markets, who have the experience and competence.

Equity funds build their assets by purchasing various stocks in the stock market. The fund manager and his team monitor the stock movement and adjust the investment whenever necessary, by selling or strengthening some assets, or buying others, according to what the market dictates and its direction.

Profits are then shared periodically, either by returning the profit on the investment or by paying the due shares to the investors.

Performance of equity funds in Turkey

It is normal for stock funds in Turkey to go through all investment paths, just like their assets consisting of company shares, ranging from continuous volatility, significant growth at multiple stages, stabilization, or even decline.

Despite the high risk associated with individual investment in stocks, Turkish investment funds are considered a safer investment haven than individual investment, for the advantages that we explain to you in the following lines.

Advantages of investing in Turkish stock funds

In general, Turkish equity funds are active investment vehicles with a good investment appetite, despite the volatility and risks of the stock market, thanks to the growth catalysts that Turkish investment funds usually perform.

Among the most important advantages of investing in these funds:

1. Professional management of the assets offered by these funds, unlike direct investment in stocks, requires extensive experience in this highly volatile industry.
2. The potential for profit growth in a short time within equity funds.
3. A promising investment sector that has received increasing attention in recent times, which enhances its growth opportunities.
4. Diversification of investments, as investment funds can distribute their investments across many funds simultaneously, which may not be possible for a single investor with limited capital.
5. Dividing the cost of investment operations across all units of the fund reduces this type of cost.
6. Ease of capital realization at will, thanks to the fund's guarantee of this procedure.

Disadvantages of investing in Turkish stock funds

In the same context, we must also talk about some of the disadvantages of investing in stock funds, the most important of which are:

1. The element of risk remains present in the field of investing in stocks, due to the constant and varying fluctuations in stocks.
2. Political events, currency fluctuations, and inflation, and their impact on the value of money or the movement of the economy and the impact of companies with shares, especially when investing in local currency.

How to choose the right stock fund?

Investing in equity funds must be based on several pillars in the process of selecting the right fund to buy its units. The fund should be chosen by the investor's investment objectives and the amount of risk he or she can tolerate. It is okay to diversify into some funds at the same time; instead of investing in one investment fund.

The fund should be chosen based on studying its published information and data, and comparing it with others in terms of performance in previous stages, and costs and expenses that may differ from one fund to another. It is also important to get to know the fund manager and his CV, as well as the rest of the team based on the fund and their competence in managing this type of fund.

The outlook for equity funds in Turkey

It is not realistic to talk about the future of the stock market in definite words, as the stock market is notoriously volatile.

However, in general, we can expect equity funds in Turkey to witness further growth, benefiting from several positive factors, the most important of which are the increased demand for this type of investment, the licenses and privileges granted to companies operating in this field, in addition to the economic reforms implemented to reduce inflation and the development of many promising industrial and investment sectors in the country.

Start a successful investment in Turkish mutual funds with Oragon

Thanks to its extensive experience in the field of investment, Oragon has made a clear imprint in the investment funds sector in Turkey and has been recognized as one of the most prominent fund establishment and management companies, in addition to the specialized advisory services provided by Oragon to help investors choose the right funds to achieve their financial goals.

Oragon has been able to shine in its sector in the field of participatory investment thanks to its team of senior experts in various financial sectors, and real estate in particular.

If you are interested in investing in Oragon's funds and would like to learn more about our advanced services in the field of fund management and establishment, as well as other important information and advice relevant to your specific situation, we invite you to visit our headquarters or communicate directly with our advisory and management team.

Edited by Oragon Company ©