Fund Dictionary

Annualized return converts returns from periods of different lengths into a single yearly rate so they can be compared; for example a 3-year total return is restated as the average yearly figure. Because the math compounds, this is also called the compound annual growth rate (CAGR) or annual compounded return. Annualizing periods shorter than a year on its own can be misleading, since short-term swings get stretched across a full year and look larger than they are.

A benchmark is a reference indicator, or basket of indicators, used to evaluate a fund's return — for example an index, an interest rate, or inflation. It shows how the fund performed relative to that yardstick. In some funds that charge a performance fee, a related idea appears as a "hurdle rate": the minimum return level used as the basis for calculating that fee.

Bonds and bills are securities issued by a government or company to borrow money; the buyer expects to receive the principal back at maturity plus a predetermined interest (the cost of borrowing the money). As a rule of thumb, instruments maturing in under a year are bills and longer ones are bonds. In Türkiye, the government's issues are called Government Bonds (Devlet Tahvili) and Treasury Bills (Hazine Bonosu).

Compounding is when the return earned in one period is added to the principal so that it, too, earns a return in the next period — "return on return." The effect grows as time lengthens, because each period builds on the already-grown value of the period before it. That is why a long-term return differs from simply adding up the individual periods' returns.

A currency fund (döviz fonu) is a colloquial label for investment funds whose return is mainly tied to foreign currencies (especially the dollar or euro); there is no separate "currency fund" umbrella type in the regulation. These funds typically hold FX-denominated debt instruments (eurobonds), foreign securities, or FX-denominated money-market instruments. Their return depends both on how those assets perform and on the change in the exchange rate against the lira.

Spreading an investment across different assets, sectors, or regions instead of a single one; the idea is that when one does poorly others may offset it, reducing overall swings. Because a fund holds many securities together by design, it provides a degree of built-in diversification, but it does not remove risk entirely.

ENAG (the Inflation Research Group) is an inflation measure produced by a group of independent academics, calculated and published separately from TÜİK's official CPI (TÜFE); it is not an official body. For the same period it can show a different figure than the official number, and akdut offers ENAG alongside TÜFE as an alternative inflation basis in its real (inflation-adjusted) return calculations.

An equity fund is a mutual fund that continuously keeps at least 80% of its total value in company shares (SPK III-52.1, art. 6). Its value tracks share prices; there is no capital protection. Funds with at least 80% of portfolio value in Borsa Istanbul shares carry '(Hisse Senedi Yogun Fon)' in their name; withholding is 0%, or 17.5% for hedge funds not traded on TEFAS.

An exchange-traded fund (ETF), called borsa yatırım fonu (BYF) in Turkey, is a fund whose units trade on Borsa İstanbul like a share and which is established to track an index approved by the Capital Markets Board (SPK). Unlike a conventional fund's single price calculated once a day, a BYF has two values: the unit share value and the trading price formed during the session.

Fund size (AUM, assets under management) is the fund's net asset value, found by taking the current total value of all assets the fund holds and subtracting its liabilities. Money flowing into the fund and appreciation of its holdings increase the size, while outflows and losses decrease it. Size gives a sense of the fund's scale but is not on its own a measure of performance.

A fund of funds (fon sepeti fonu, FSF) is a fund that holds at least 80% of its portfolio in the units of other investment funds and exchange-traded funds; instead of individual securities it holds other funds together. Its aim is to give access to several funds and diversification in a single product. Because the underlying funds have their own costs, the total cost can be two-layered; the SPK sets ratio limits for a single fund and for the overall basket.

An exchange rate (FX) is the value of one currency expressed in another; the most watched, USD/TRY, shows how many Turkish lira one US dollar buys. akdut uses the rate to restate a return in dollar terms by converting a TRY return with the period's start and end rates. The FX data comes from the central bank's (TCMB) EVDS service.

A free fund (serbest fon, the Turkish counterpart of a hedge fund) is a type of investment fund subject to fewer restrictions than others on the assets and strategies it may use; it can employ a wider range of tools such as leverage (using borrowing to enlarge positions) and derivatives. This flexibility can increase swings in both potential return and risk. In Türkiye it is usually offered only to qualified investors.

An investment fund is bought from an investment account at a bank or brokerage that is a TEFAS member. You buy it not in units but in the lira amount you want to invest; how many units you get is set by the NAV per unit calculated on the trading day. Most funds use forward pricing: the price is unknown at order time and the trade fills at the first price struck after the order.

Inflation is the general rise in the price level of goods and services over time, meaning your money buys less than before. When inflation is high, the same amount of money buys fewer goods than a year earlier. In Turkey, official inflation is measured by the statistics institute TÜİK using the Consumer Price Index (CPI), known locally as TÜFE.

Interest is the price paid for borrowed money — the rate the borrower pays on top of the principal (the original amount borrowed). The return on instruments like bonds, bills, repos and deposits is typically expressed as interest. Adjusted for inflation it is called the "real interest rate"; when inflation is high, the nominal (face-value) rate may translate into less purchasing power.

Liquidity describes how quickly and easily an asset can be converted to cash without losing significant value. Highly liquid assets (such as money-market instruments) can be turned into cash very quickly, while less liquid assets may take longer to find a buyer and sell. For a mutual fund, liquidity also relates to how easily investors can buy and sell its units.

The management fee is what the portfolio management company charges for running the fund, usually as an annual percentage skimmed proportionally from the fund's daily value. It is charged whether the fund gains or loses and is typically the largest part of the total expense ratio. The rate varies by fund type and risk level and is stated in the fund's prospectus and information documents.

Maturity is the date on which a financial instrument (such as a bond, bill or deposit) ends and the principal is repaid; it is also called redemption. Short-term instruments measure this in months, long-term ones in years. The longer the maturity, the more sensitive the price tends to be to changes in interest rates.

The largest percentage drop a fund price has experienced from a peak it reached down to its subsequent lowest point (the trough). It shows how far the fund pulled back from its high during its worst stretch in the past; it does not imply future declines will be the same.

A money market fund (often called a "liquidity fund" in Turkey) is a type of mutual fund that invests in very short-maturity, low-risk instruments such as deposits, reverse repo, and short-term bills. Because maturities are short and the assets are highly liquid (quickly convertible to cash), price swings are generally low and the fund can be turned into cash quickly. In Turkey, regulation requires these funds to keep the weighted-average maturity of their portfolio limited; even so, they carry no guarantee of return.

A mutual fund is a collective investment vehicle that pools money from many investors and, through professional portfolio management, spreads it across assets such as stocks, bonds, or gold. An investor buys units (shares) of this pool and thereby owns a slice of the fund's assets; the unit value changes daily with the value of the underlying holdings. In Turkey, mutual funds are established and run by portfolio management companies under the supervision of the CMB (SPK).

Nominal return is an investment's percentage change stated directly in currency terms (e.g. in Turkish lira), without accounting for inflation. It does not reflect the real change in purchasing power; for that, inflation is removed from the nominal figure to get the real return.

"Katılım fonu" has two meanings: in Turkish banking law it is money held in special current and participation accounts at participation banks; in everyday use it means an investment fund holding no interest-based instruments. Under SPK rules a participation umbrella fund holds lease certificates, participation accounts, equities, precious metals and other non-interest-based instruments the Board approves.

A participation unit is a dematerialized capital-markets instrument (held at MKK) showing your share in an investment fund's portfolio — not a company's stock. Your unit count times the NAV per unit gives your holding's value. In an open-ended fund, buying issues new units and selling redeems them; exchange-traded and GYF/GSYF units transfer between investors instead.

A performance fee is an extra charge taken from the part of a fund's gain that exceeds a pre-defined threshold (such as a benchmark return). It is most common in hedge-fund-style (Serbest) funds and sits on top of the management fee; if the threshold isn't beaten, no performance fee is charged. It is usually calculated using a "high-water mark" (so the same gain isn't charged twice), and the exact conditions and rate are disclosed in the fund's information documents and KAP filings.

The Individual Pension System (BES) is a long-term, voluntary savings scheme — supported by a state contribution — in which the contributions people set aside during their working years are invested in pension funds; it also has a workplace auto-enrollment form (OKS). For BES funds, the withholding tax (income-tax deduction) on the gain is tiered, varying by how long you stayed in the system and how you exited. How the system works and the state-contribution conditions are set by regulation.

A qualified investor is one who meets certain financial-means, knowledge and experience criteria defined in SPK regulation, and can therefore invest in some capital-market instruments that are not offered to everyone (such as hedge-fund-style "serbest" funds). The status is set by criteria like the size of financial assets held and is documented by the intermediary. The units of serbest funds are issued to be sold only to qualified investors.

A real estate investment fund (GYF) is an investment fund under Communiqué III-52.3 that manages a portfolio of real estate and real-estate-based rights with money from qualified investors. It differs from a GYO, a company whose shares trade on the exchange: a GYF's units are sold only to qualified investors and its unit value rests on periodic real estate appraisal.

Real return is what remains of an investment's return once the effect of inflation is removed — the actual change in purchasing power. If the nominal return (the plain change in the money figure) trails inflation, the real return can be negative even though the money figure went up. akdut shows it against different bases such as TÜİK-CPI, ENAG, USD, or US-CPI.

A repo (repurchase agreement) is the sale of a security (usually a bond or bill) with a commitment to buy it back at a higher price on a set date; in practice it is a short-term way of lending or borrowing money. The price difference is the return on the transaction. Seen from the other side — the party that buys the security with an agreement to resell it — the same deal is called a reverse repo.

Return measures how much an investment's value changed over a period, expressed as a percentage: the difference between the starting and ending value, divided by the starting value. For Turkish mutual funds it is usually computed from the change in the unit (per-share) price between two dates. A positive return reflects a gain, a negative one a loss; past returns are not an indicator of future results.

A standardized indicator that summarizes a fund's risk level on a scale from 1 (lowest) to 7 (highest), usually based on how much its price has fluctuated (its volatility). A low number points to a historically steadier path and a high number to a more volatile one; it does not indicate future return or the likelihood of loss.

A ratio that measures how much extra return a fund produced for each unit of risk taken; it divides the return above the risk-free rate by the fund's volatility (the standard deviation of its returns, a measure of how much they fluctuate). It is based on past data and does not indicate future results.

A statistical measure of how far a fund's returns spread out from their average, and the most common way to put a number on volatility (how much returns swing). The larger the deviation, the more widely returns scatter around the average, meaning a more volatile path.

A stock is a security that represents partial ownership of a company, entitling the holder to a share of its profits (dividends) and any change in its value. Its price moves with supply and demand, so it can rise or fall. In Türkiye, stocks trade on Borsa İstanbul.

Sukuk (known in Türkiye as a lease certificate, kira sertifikası) is a financing instrument structured to comply with interest-free finance principles; instead of paying interest, its return is tied to the rental or profit-share income of an underlying asset. It gives the investor a share in that asset and a right to part of its income. In Türkiye it is issued through asset-leasing companies (VKŞ).

TEFAS (Turkey Electronic Fund Trading System) is an electronic system through which mutual funds set up by different institutions in Turkey can be bought and sold from a single central platform. This lets an investor access funds from other institutions even if they hold an account at just one bank or brokerage. The system is operated by Takasbank, and it publishes funds' price and return data publicly.

The total expense ratio (TER) is a single percentage showing the annual total cost of holding a fund as a share of fund size; it bundles the management fee plus custody, audit, and other operating costs. These costs are deducted automatically from the fund's assets, so reported returns already reflect their drag. In Türkiye these costs are capped at a maximum expense ratio and disclosed in the fund's information documents.

TÜFE (the Consumer Price Index, CPI) measures the change in the price of a basket of goods and services a typical household consumes; it is Turkey's official inflation gauge, published monthly by TÜİK (the Turkish Statistical Institute). Its change versus the same month a year earlier is called the 'annual inflation' rate.

Unit NAV is the price of a single unit (share) of a mutual fund, found by dividing the fund's total net asset value by the number of units in circulation. As the value of the fund's holdings rises the unit NAV goes up, and as it falls the unit NAV declines; this is why a fund's return is usually measured by the change in unit NAV over time. Because funds in Turkey typically accumulate gains into the unit value rather than distributing them, the change in unit NAV represents the total return.

A variable fund (değişken fon) is defined residually in the SPK's III-52.1 Communiqué: funds that, in terms of portfolio limits, fall into none of the types listed before it take this name. It has no minimum asset ratio it must hold continuously, so its breakdown can shift widely. Two variable funds can carry very different risks; the name alone does not show a risk level.

A venture capital investment fund (GSYF) is a fixed-term, legal-personality-free fund set up with money from qualified investors to take stakes in and finance venture companies. It is governed by the SPK's Tebliğ III-52.4; at least 80% of its total value (51% under the SME carve-out) is venture capital investments. It is long-horizon, illiquid, and valued by periodic appraisal reports, not a market price.

A measure of how much a fund's price (its unit value) swings up and down over time, i.e. how jumpy it is. High volatility means sharper ups and downs, low volatility a steadier path; on its own it is neither good nor bad.

Withholding tax (stopaj) is tax deducted at the source the moment income arises and remitted to the state; for investment funds it is computed only on the gain you make, never on your principal. Under the Turkish tax system the rate can differ by fund type and sometimes by holding period — for instance, some funds qualify for a lower rate when certain conditions are met. This is general information only; for your personal tax situation consult official sources and a tax advisor.

YTD (year-to-date) shows the return an investment has earned from January 1 of the current year up to today. It is not a fixed 12-month window, because it covers only the part of the current year that has elapsed; it lengthens each day and becomes the full-year return once the year ends. As a result, YTD figures looked up on different dates cover periods of different lengths.