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(Bloomberg) -- Two weeks after putting his savings into a high-flying Turkish stock fund on the advice of a relative, Mehmed Kervanci was frantically hitting the sell button on his phone’s trading app. Kervanci, 28 and unemployed, wanted to use the 2.5 million liras ($51,000) to help pay for his upcoming wedding. Instead, he’s one of almost half a million investors caught in the crisis that’s engulfed Turkey’s asset managers and left them wondering if they’ll ever get their money back. Turkish regulators have announced the liquidation of about $20 billion in stock and money-market funds as part of a probe into long-running Ponzi-like schemes involving illiquid shares. It’s not clear how much of that can be retrieved. While some investors understood that triple-digit percentage returns were unsustainable and jumped off the wagon before the crash, others had little idea what they were getting into. A total of 455,758 investors were trapped in the more than 130 funds taken into liquidation, the Capital Markets Board said on Wednesday. “When the order to sell wasn’t processed, we panicked,” Kervanci said by phone. “Deposits weren’t providing good returns, so we were looking to invest somewhere else. We are devastated.” Like many others, he’d hoped the lofty returns on funds run by firms like Tera Portfoy Yonetimi AS and Pusula Portfoy Yonetimi AS would help his nest egg beat an inflation rate that’s averaged about 50% over the past three years. How Turkey’s High-Flying Funds Came Crashing Down: Explainer Turkey is no stranger to market meltdowns, though the focus on past occasions has typically been on the weakening lira and threats to the banking system. The current bout of turmoil stems from suspicions a group of funds were artificially inflating their gains, with regulatory changes introduced at the end of August morphing into a full-blown panic this month. The man at the center of the collapse — Tera Chairman Emre Tezmen — was arrested early Wednesday. ‘Mostly Artificial’ The high returns were “mostly artificial,” said Orkun Saka, a lecturer at City St. George’s, University of London. “In a stock with a thin free-float, the fund’s own buying becomes the price signal that revalues the fund’s own book.” Share prices plunged, forcing the firms to sell more assets to raise cash, threatening a cycle of further losses and withdrawals. Investors pulled about 600 billion liras from the nation’s investment funds between Aug. 31 and Sept. 23, according to fund tracker platforms Fonbul and Fintables. Turkish stocks suffered their biggest slump in more than a year on Sept. 16. “Now all the shares are plummeting every day,” said Cem, 30, a trader who also came late to the rally and who asked that his full name not be used for concern about repercussions. “Who in his right mind would buy those stocks so we can be repaid?” As the selloff spiraled, he found himself unable to offload the 2.3 million lira he’d invested in two Tera funds. Cem said he’s gone from hoping the money would help with a down payment on a home, to fretting about where next month’s rent will come from. The fact that he’d invested the gold he received as a gift at his wedding was particularly painful, he said. “It’s driving me crazy. I haven’t been eating properly for days,” he said by phone. ‘Into the Fire’ Emil Gurol Akyuz moved 2.4 million liras he’d invested in gold into two Tera equity funds at the end of August, thinking they would protect his savings as the price of the metal fell. “I was reluctant at first, but the funds kept rising,” Akyuz, a university graduate who’s currently looking for work, said by phone from Istanbul. “I practically jumped out of the frying pan into the fire. I’ve been sleeping two, three hours a day.” When Tera announced it would buy Pusula Portfoy earlier in the month, questions continued to swirl over how it would honor redemption demands. Investors in Tera’s funds panicked, and on Sept. 16 the firm said it, too, would be unable to make payments to clients seeking an exit. “These were all regulator-approved funds,” said Latif Ersoy, an entrepreneur from Istanbul, who invested about 300,000 liras in three Pusula funds early in the year. After losing 90% of his original investment, “it really doesn’t matter now whether I’ll be repaid,” Ersoy said. --With assistance from Inci Ozbek and Tugce Ozsoy. More stories like this are available on bloomberg.com ©2026 Bloomberg L.P. Catch all the Business News , Market News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates. Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.
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