Turkish Fund Managers Eye Record Profit Gain as Assets Jump

(Bloomberg) -- Turkish money managers are set to post a record jump in profit after assets overseen by the industry increased by a third.

Net income for 2020 has surged by an average of 92% at the 11 asset-management companies to have reported results so far. The earnings, which include four of the five biggest firms and cover 58% of assets overseen by the 43 companies in the sector, suggest that last year is also shaping up as the most profitable for the industry since at least 2014.

A number of money managers, including Tacirler Asset Management, attribute the sharp rise in profit to the strong performance in local shares, boosted in part by a rise in retail trader participation. The country’s benchmark stock index gained almost 30% in 2020, outpacing the 16% gain across emerging-market equities, as the lira weakened by 20% against the dollar, declining for an eighth year.

“With the influx of local investors during the pandemic, there has been a significant growth in assets under management, which is what has brought about this high profitability,” said Okan Alpay, general manager of Tacirler Asset Management in Istanbul.

Total assets overseen by Turkish money managers increased by 33% to 356.4 billion liras ($50 billion) as of November compared with a year earlier, according to the latest figures on the Turkish Capital Markets Association’s website.

“The cost of managing a portfolio doesn’t change proportional to the fund’s size,” helping to keep costs in check, Alpay said.

Turkey has seen a rise in retail stock market trading during coronavirus lockdowns. The number of active investors increased by 18% to 4.7 million last year, according to data from the Central Securities Depository of Turkey, with equity investors reaching two million.

In contrast, active government bond investors dropped by almost 50% in the 11 months ended Dec. 31, while there were 12% fewer in corporate bonds, a presentation by the depository shows.

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