Evaluation of the Performance of Equity Funds in Turkey

Abstract

Purpose – The young population, the ongoing inflation problem, dynamic market structure, and theongoing geopolitical risks place Turkey in a unique position in comparison with other emerging markets.Recently, with the decrease in interest rates, the demand for stocks has surged and the number of stockinvestors has increased by 30% in a short period of time. This situation has boosted the need for equityfunds, and it has become important to measure the performance of these funds effectively. The purposeof this study is to measure the performance of stock funds and to determine the statistical significancelevels of the fund performances announced to the public on the TEFAS platform. Design/methodology/approach – In this study the performance of equity funds in Turkey has been testedby following the FF3F approach. Firstly, reference portfolios to be used for performance comparison werecreated. Then stock-based performances of all equity funds that operate continuously in Turkey duringthe last five years were tested. Findings – According to the findings of the research, it was observed that the funds on average hadperformances exceeding the index. However, it has been determined that the results in the TEFAS platformmay not be very meaningful when comparing the stock funds among themselves. Discussion – Although the performance difference between the funds is high according to the TEFASplatform data, it has been determined that this difference is due to the investment of some funds in small scale companies and is not sustainable.