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MAIN INSTITUTIONS OF CAPITAL MARKET Capital Markets Board (CMB) New CM Law on Dec. 2012 Communiqués Borsa İstanbul (Stock Exchange) Takas İstanbul (Clearing and Settlement Bank, CCP) MKK (Central Securities Depository) Other Participants... 2
THE EVOLUTION OF MFM in TURKEY 1987 - First Mutual Fund Established 1997 Banks are forbidden to trade equities 2001 Investors Protection Fund established 2014 Structural Amendments for MF 2015 - Electronic Funds Platform started 3
OUTLOOK FOR MUTUAL FUNDS IN TURKEY 400 350 300 Number of the Collective Funds 2017-Q2 292 350 25,000 20,000 Portfolio Size of the Collective Funds (mio $) 2017-Q2 19,734 250 15,000 12,940 200 150 10,000 100 75 5,000 50 0 1 Venture Capital Fund 8 9 9 Real Estate Fund Trusts Exchange Hedge Fund Traded Fund Pension Funds Securities Fund 0 23 49 116 403 Venture Capital Fund Exchange Traded Fund Trusts Real Estate Fund 1,319 Hedge Fund Securities Fund Pension Funds Source: Turkish Capital Markets Association 4
2013-Q3 2013-Q4 2014-Q1 2014-Q2 2014-Q3 2014-Q4 2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2 2016-Q3 2016-Q4 2017-Q2 Billions of Turkish Lira and USD OUTLOOK FOR MUTUAL FUNDS IN TURKEY 60 Mutual Funds Portfolio Value 120% 50 52,60 100% 40 30 31.48 30.97 29.53 32.42 33.88 35.82 38.08 38.68 39.76 38.34 38.04 41.16 42.62 44.48 80% 60% 20 15.46 14.54 13.70 15.28 14.88 15.39 14.57 14.41 13.14 13.14 13.47 14.27 14.21 12.64 14,74 40% 10 20% 0 0% Total Fund Portfolio (Billions of Turkish Lira) Total Fund Portfolio (Billions of US Dollars) Source: Takasbank 5
OUTLOOK FOR MUTUAL FUNDS INTURKEY Mutual Funds Asset Allocation in Turkey 2017-Q2 Worldwide Regulated Open-end Funds Net Assets Distribution 2017-Q2 Other 11% Corporate Bonds 45% Other 7.6% Money Market 11.0% RealEstate 1.4% Equity 40.6% Overnight Lending 17% Guaranteed 0.1% Equity 8% Balanced/mixed 17.8% Eurobond and Foreign Securities 11% Time Deposits 8% Source: Takasbank and European Fund and Asset Management Association (EFAMA) Bond 21.3% 6
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 OUTLOOK FOR MUTUAL FUNDS INTURKEY Total Funds Assets/GDP Ratio -Turkey Mutual Fund Assets /GDP 5% 60% 5% 4% Mutual Funds + Pension Funds Asset / GDP 4.04% 4.31% 50% Brazil 49% 4% 3.60% 40% South Africa 39% 3% 3.16% 3% 30% Malaysia 30% 2% Rep.of Korea 25% 2% 2% 20% Euro Area 20% 1% 1% Total Mutual Funds Assets/GDP 10% World; 15% India 7% 0% 2013-Q4 2014-Q4 2015-Q4 2016-Q4 2017-Q2 0% Russian Federation Turkey 2% Total Mutual Funds Assets/GDP Mutual Funds + Pension Funds Asset / GDP Source: Takasbank and Turkish Statistical Institute AND Federal Reserve Bank of St. Louis 7
Bİllİons of USD Equally-weighted Fund Return OUTLOOK FOR MUTUAL FUNDS IN TURKEY 8 Net Asset Values and Equally-Weighted Annual Fund Returns 2017-Q2 35% 7 6.98 33% 30% 6 25% 5 4 21% 4.17 20% 3 2 12% [VALUE] 15% 18% 10% 18% 15% 10% 1 0 0.10 1.08 0.10 0.44 0.15 0.05 [VALUE] Gold Funds Fixed Income Funds Dynamic Funds Fund of Funds Equity Funds Mixed Funds Islamic Funds Money Market Funds 1.00 Hedge Funds 5% 0% Total Net Asset Value 2016 September (Billion USD) Equally Weighted Fund Return % Source: Takasbank 8
OUTLOOK FOR MUTUAL FUNDS INTURKEY Ceiling Cost Boundaries by Fund Type as % of Net Asset Value Equity, Hedge, Mixed, Longterm Fixed Income and Speciality Funds [VALUE]% Shortterm Fixed Income, Pecious Metals and Index Funds [VALUE]% Fund of Funds [VALUE]% Money Market Funds [VALUE]% 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 Source: Capital Markets Board Communique III-52.1 9
OUTLOOK FOR MUTUAL FUNDS INTURKEY 100% 90% Portfolio Management Company Concentration as % of Net Asset Value 93.3% 80% There are currently 41 actively operating Portfolio Management Companies 77.3% 70% 62.9% 60% 53.5% 50% 43.5% 40% 30% 25.3% 20% 10% 0% Top 1 Top 2 Top 3 Top 4 Top 5 Top 10 Source: Takasbank 10
2006-Q2 2006-Q4 2007-Q2 2007-Q4 2008-Q2 2008-Q4 2009-Q2 2009-Q4 2010-Q2 2010-Q4 2011-Q2 2011-Q4 2012-Q2 2012-Q4 2013-Q2 2013-Q4 2014-Q2 2014-Q4 2015-Q2 2015-Q4 2016-Q2 2016-Q4 2017-Q2 OUTLOOK FOR MUTUAL FUNDS IN TURKEY 4,000,000 Numbers of Mutual Fund Investors by Fund Type 3,500,000 3,000,000 Mixed Funds 2,500,000 2,000,000 Money Market Funds 1,500,000 1,000,000 500,000 Fixed Income Funds - Fixed Income Funds Equity Funds Money Market Funds Mixed Funds Dynamic Funds Other Source: Central Registry Agency of Turkey (CRA) 11
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017-Q2 Billion USD OUTLOOK FOR MUTUAL FUNDS IN TURKEY 9.0 Residents' Portfolio Assets in Foreign Securities 8.0 7.7 7.0 6.6 6.8 6.9 6.0 5.0 4.0 3.9 3.9 3.7 3.5 3.0 2.0 1.0 0.0 3.0 1.9 1.9 0.8 0.8 0.5 0.6 0.0 0.0 0.1 0.1 0.1 0.2 0.1 0.3 0.7 1.1 1.2 1.0 1.1 2.5 1.7 2.2 2.1 1.1 1.7 Equity Fixed Income Instruments Source: Central Registry Agency of Turkey (CRA) 12
% Share OUTLOOK FOR MUTUAL FUNDS IN TURKEY 100 Residents' Portfolio Assets in Foreign Securities-Geographical Allocation 90 80 [SERIES NAME] [VALUE]% 70 60 50 [VALUE]% [SERIES NAME] 40 30 Europe [VALUE]% 20 10 [SERIES NAME] [VALUE]% [SERIES [VALUE]% NAME] 0.... 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017-Q2 Europe Africa America Asia Australia Source: Central Registry Agency of Turkey (CRA) 13
Poland Brazil Malaysia Russian Federation Georgia Hungary Turkey United Kingdom Average, All Countries Portugal Korea New Zealand Norway France CHALLENGES AND OPPORTUNITIES Financial Literacy Score (Out of 21) 16 14 12 11.6 12.1 12.1 12.2 12.4 12.4 [VALUE] 13.1 [VALUE] 14.0 14.4 14.4 14.6 14.9 10 8 6 4 2 0 Note: "Average, All Countries" is calculated with the scores of 31 countries. Figures of the rest are not presented for the sake of visual convenience. Source: OECD 14
Muhterem Celik e-mail; muhterem.celik@takasbank.com.tr THANK YOU, 2nd November 2017 15