Turkey free fund market faces allegations of massive financial irregularities

Özgür Karabat, an Istanbul deputy for the YENİ Party, has raised allegations of significant financial irregularities within Turkey’s free fund market. Karabat highlighted the rapid expansion of free fund portfolios, which grew from 2.23 trillion TL at the end of 2024 to 6.21 trillion TL by July 2026. This represents a 124% increase during 2025 alone. As of July 2026, free funds account for approximately 60% of Turkey’s total 10.38 trillion TL fund portfolio.

Karabat estimated that the potential for gross management fees reached approximately 106 billion TL between 2025 and the first seven months of 2026, based on an average annual management fee of 1.5%. He expressed concerns regarding market health, questioning how prices are formed if funds concentrate on specific stocks or if a large portion of actual circulation is held within certain funds.

Furthermore, Karabat cited warnings from the international financial research firm MSCI regarding funds being artificially inflated. He called for a comprehensive retrospective investigation into the roles of public officials and politicians in this process, suggesting that the current preparations by the Capital Markets Board (SPK) to tighten regulations are a delayed response to these risks.