The importance of analyzing the historical performance of investment funds

Analyzing the historical performance of investment funds is one of the most important steps that should not be missed by investors in this field, given the importance of this step in detecting the future of investment by taking advantage of historical introductions during the past periods.

Good historical performance suggests the possibility of effective investment performance in the next phase, and it also indicates the fund's wise management, and the possibility of this management to provide more encouraging investment achievements in the future.

It is also known that evaluating the historical performance of a particular fund is only one of a number of items that must be studied before making a decision to invest in that fund, and it is not correct to analyze performance in isolation from understanding the fund's strategy, investment plans, risks and avoidance plans.

Types of Turkish investment funds and their development

Turkish investment funds include most of the most popular investment options known in the industry globally:

• Equity funds: Specialize in investing in the shares of companies listed on the Turkish Stock Exchange.
• Bond funds: Specialize in buying government or corporate bonds.
• Mixed funds: They combine different assets in one investment portfolio, so they are characterized by diversity.
• Real estate funds: Funds that invest in various types of real estate, such as apartments, villas, resorts, commercial, industrial, and medical centers.
• Commodity funds: Investments in the most well-known and important global commodities, such as oil, gas, and wheat.
• Precious metals funds: Invests in metals such as gold and silver.
• Startup funds: Specialize in supporting projects and companies in exchange for co-investment benefits.

And other types of funds with multiple investment orientations.

This sector has witnessed an attractive recovery for investors in Turkey, thanks to the supportive legislation and government facilities granted, as well as the tax reductions or exemptions provided by the regulators of these funds.

Recent years have also witnessed increased societal awareness of the importance of investing in this important investment class, thanks to its well-known advantages, such as the rational management of funds by experts in the fields of investment, and the great responsibility that these funds carry in order to grow investments without risks and fluctuations.

And let's not forget the significant contribution of advanced technology that has allowed investors to buy and sell units in mutual funds seamlessly.

Growth in the number of funds and the trend toward investing in them

Earlier, the number of licensed and open investment funds in Turkey was announced at 337 investment funds, and the numbers may increase significantly in recent times, as the popularity of this type of investment has increased in recent years.

It is noticeable that the number of investors in funds is constantly increasing, as the number of mutual fund investors exceeded 5 million people for the first time, on June 7, 2024, according to the Central Registration Agency (MKK).

The number of mutual fund investors increased by 1.2 million people in one year, a figure that demonstrates the enormous uptake in recent years.

The historical performance of equity funds in Turkey in the last 5 years

The historical performance over the last 5 years of equity funds points to a stellar performance. According to tefas, fund returns have ranged from 203% to 2532%, which is quite attractive and varies greatly from fund to fund.

Are the historical financial results of mutual funds satisfactory?

When talking about the historical results of investment funds in Turkey, a distinction must be made between short-term and long-term investment, as investment in investment funds is characterized by long-term growth, unlike short-term investments, which are characterized by volatility.

As a result, Turkish investment funds have generated good returns over the long term.

How have Turkish investment funds performed in financial crises?

It is natural for investment funds in Turkey to be affected by the reality of the economic crises that have afflicted the country, just like other global economies and what happens in them during their various crises.

For example, on March 11, 2020, when the World Health Organization declared COVID-19 a global pandemic, it became important to study the impact of the pandemic on health and financial markets, as the effects of the pandemic were strongly felt on the economy and financial markets in general, especially after global lockdowns led to sudden and rapid declines in economic markets.

Looking at studies that have examined the impact of COVID-19 on the financial market in Turkey, logistic regression analysis and confusion matrix were performed for that period, and in this study, 8 stocks were categorized as losers with 61.5% accuracy and 16 stocks were categorized as winners with 94.1% accuracy.

When looking at the sector of the winning stocks, most of them belonged to the industrial and retail sectors. The losing stocks belonged to the airline and banking sectors.

When comparing BIST-30 stocks during the COVID-19 period to 2019 market data, more stocks were categorized as “winners” than “losers”.

In international studies of investor preferences and behaviors, a 13.9% increase in weekly trading volume intensity compared to before the pandemic was observed.

Comparing the historical performance of Turkish investment funds with other countries

A general comparison of the historical performance of Turkish investment funds with other countries of the world may make the task very difficult for the researcher, as funds generally differ in their specializations and traded assets, noting the impact of currency fluctuations and other accounting factors and taxes as well as calculating investments in a certain period of time or in the long term, and others.

In general, Turkish investment funds are an important field for investment, thanks to the Turkish government's incentives for investors and tax reductions or exemptions, in addition to the high demand for investment in them.

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Edited by Oragon Company ©