What are the types of investment funds in Türkiye?

The role of investment funds is to achieve profits by allowing individuals to invest their savings in various investment assets, where investors put their money in a mutual fund, by purchasing one or more units within this fund, just as is the case when purchasing a share in a public joint stock company (The difference is that buying company shares requires managing your investment yourself, unlike investment funds, professional fund managers work on your behalf to grow your investments).

Then, the savings of different investors are collected in a savings fund, with participation shares distributed based on shares, where the value of participation shares is determined after dividing the fund’s principal by the number of units, and its financial value is usually calculated at the end of each day, and the value of the fund increases or decreases according to the assets that the fund invests in it and the success or decline of those investments.

The assets in which the fund will invest are determined by professional fund managers in their fields of work and the licenses granted to them, after setting plans, analyzing the market situation, studying the risks and how to avoid their negative effects, and the expected returns from their fund’s investments.

Here we pause with the most famous investment funds in Türkiye, the most important of which we mention:

Real estate investment funds

Definition: These are investment funds whose investments are specialized in the field of the real estate sector, of all types, built and unbuilt, residential and commercial.

Advantages and disadvantages: These funds are often characterized by their security and growth, the ability to easily diversify assets, and the density of opportunities available in Turkey.

It is also suitable for investors who want to avoid risking their capital, and who are looking for higher returns from the investment market, as these funds have lower risks than others, thanks to strict regulation, an audit by the Capital Markets Board of Turkey, and limited licenses.

Higher investment returns can also be achieved through the ability to bargain and obtain discounts, the tools that the fund manager is supposed to master, in addition to the tax exemptions granted by the Turkish government to these funds.

The disadvantage of these funds is that they often require a long-term commitment and that liquidating assets may require more patience.

Stock funds

Definition: These are investment funds that specialize in investing in shares of companies listed on stock markets, and build their profit growth system based on the growth in the prices of purchased shares.

Advantages and disadvantages: Investment funds specialized in trading in bond shares are characterized by the possibility of achieving relatively high profits, with the ease of diversifying investments by distributing capital among some different company shares, which contributes to reducing risks, in addition to the fact that bond shares can be liquidated for their financial value simply and quickly.

Its disadvantages are that it does not guarantee returns, with the possibility of stocks losing their value. Because investing in stock markets is one of the most volatile investments.

Index Funds

Definition: An index fund is a fund that consists of a group of stocks that track a market index (such as the SP500). Instead of buying one single company, an index fund is a basket of stocks of multiple companies under a single ticker symbol.

Advantages and disadvantages: One of the advantages of investing in index funds is that investing in them is low-risk compared to stocks. For example, the index may consist of more than 500 different companies. While some companies do a good job, some other companies may perform less than that, and as a result, the index is not determined based on the performance of one specific company, which reduces the risks. Where the risks are distributed among 500 companies or more or less.

This is in addition to the long-term growth potential, as well as the passive form of investment. After purchasing in index funds, there will be no need for further work. All you have to do is buy and hold the shares until the market presents its results.

One of its disadvantages is that some index funds impose a minimum amount to invest in them.

Bond funds

Definition: Bond funds are types of investment funds that invest their money in a portfolio of bonds issued by the government or some companies, to achieve returns through usurious interest when the value of those bonds is redeemed.

Advantages and disadvantages: In addition to the fact that the financial returns that these funds may achieve are less than the profits of equity funds in the long term, the risk is relatively high, in the event of a change in the interest rate or the failure of the counterparty to pay the value of the bonds, which leads to a loss of capital.

Precious metals investment funds

Definition: They are funds that specialize in investing in precious metals, such as gold and silver, and other precious metals used in industrial work, such as platinum, palladium, iridium, and ruthenium, which are traded on the stock exchange.

Advantages and disadvantages: Investing in gold is generally described as an eternal investment, as the financial value of gold tends to always rise, and gold is often immune to inflation and its effects on regular currencies. Precious metals are also described as a haven in light of the uncertainty of the soundness of the economic situation, and they are also capable of smooth liquidation of their value.

However, this type of investment may not be suitable for hasty speculators, as metal investment indices do not move quickly, and the period of capital growth may extend for a longer period than other investments, such as stocks and real estate, which are subject to different rules in the growth of the value of their investment shares.

5. Mixed funds

Definition: These are funds that invest in more than one financial instrument at the same time, and they are called mixed funds for this reason, as these funds combine investments in stocks, bonds, cash, precious metals, and others.

Advantages and disadvantages: Naturally, mixed funds provide a lower risk ratio, thanks to the diversification of assets, and they mostly invest in assets that are easy to liquidate, but there remains a risk of a decrease in some of the investments included in the fund, especially when investing in types of investments with high risks.

What factors affect the choice of investment fund?

Before choosing any investment fund to purchase units from or invest through; It is necessary to study a set of data that is supposed to put the dots on the letters and direct your savings compass to the right place:

• The type of investment offered by the fund: The fund’s specialization will depend on a number of the following points that we are dealing with. Some funds have very high investment risks.
• We also advise you not to invest in funds with complex investments that you cannot understand how they work, as you must have an acceptable level of understanding of the work of the investment fund and follow the growth of your capital or know your losses.
• Potential risks: Investments are of course not devoid of a set of risks that vary from one investment to another, but some investments have a higher risk than others, and their effects may be violent and threaten the capital, depending on the nature of the investment and the way the fund is managed.
• The experience and CVs of those in charge of the fund: The fund manager plays the most important role in controlling and directing investments, and experience and sophistication are among the most important ingredients for success required in managing the investment fund.
• The history of the fund, its record of achievements, and the growth figures achieved in similar investments.

Oragon Company services in establishing and managing investment funds in Türkiye

The “Oragon Company” business was launched as a subsidiary of the “Imtilak Group” with its wide-ranging investment activities in Turkey, and in Oragon we are fully legally subject to the supervision of the Turkish Securities Authority.

The name “Oragon” shines in the joint investment sector thanks to its experienced team with a strong reputation in various investment fields in Turkey. Also to play a pioneering role in the field of establishing investment funds, with other additional services surrounding this specialization. Starting with free, expert, and specialized consultations in the field of investment funds, and not ending with the management of real estate funds and other funds and various investment portfolios, in addition to our interest in investments compatible with Islamic Sharia, and all of this according to disciplined, precise and conscious work principles, and with elaborate institutional work mechanisms.

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