1. Prof: Dr : Semih Büker
Prepared by: Abdulkadir Tifow
Dept: Finansman

2. Mutual Funds (Yatırım Fonları)
Definition of MF:
A mutual fund is an investment company that pools
money from many investors and invests the money in
stocks,
bonds,
short-term
money-market
instruments, other securities or assets, or some
combination of these investments. The combined
holdings the mutual fund owns are known as its
portfolio. Each share represents an investor's
proportionate ownership of the fund's holdings and
the income those holdings generate.

3. Cycle of Mutual Fund

4. Advantages of Mutual Funds
(Yatırım Fonların Avantajları)
 Professional Management (Profesyonel Yönetim)
Picking your own stocks and bonds to put in your portfolio and beating
your benchmarks is difficult and time consuming. Hiring a mutual
fund to make those decisions for you can be beneficial and save time.
 Diversification (Çeşitlilik)
Diversification is an investing strategy that can be neatly summed up as
"Don't put all your eggs in one basket." Spreading your investments
across a wide range of companies and industry sectors can help lower
your risk if a company or sector fails. Some investors find it easier to
achieve diversification through ownership of mutual funds rather than
through ownership of individual stocks or bonds.
 Liquidity (Nakde Çevirebilme)
Money invested in mutual funds is generally liquid. You can usually sell
your shares and collect money from open-ended funds (funds that can
create and redeem shares on demand), usually within two business days.

5. Continue
 Flexibility: (fleksibilite)
Owning individual stocks and bonds does not allow for much flexibility in
terms of liquidity, or the ability to access your money. You cannot write
checks on individual stocks and bonds. However, many mutual funds allow
for more flexibility by allowing you to write checks on your account.
 Economies of Scale (Büyük Ölçekli Yatırım Avantajı)
Because a mutual fund buys and sells large amounts of securities at a
time, its transaction costs are lower than what an individual would pay for
securities transactions.
 Simplicity:
You can begin buying units or shares with a relatively small amount of money
(e.g., $500 for the initial purchase). Some mutual funds also permits you to buy
more units on a regular basis with even smaller installments (e.g., $50 per month).
 Service
Mutual funds generally offer service to answer questions, help you
open accounts, purchase and sell funds, and to transfer funds as well.

6. Types of Mutual Funds

7. Types of mutual funds By structure
 1) Open-Ended funds: is a collective investment schemes which can issue and
redeem shares at any time.
In simple terms, an open-end mutual fund is when a company aggregates money
from many investors and invests the money in stocks, bonds, short-term moneymarket instruments or other securities. Investors purchase mutual fund shares
directly from the fund itself at a price that is determined by the fund's per-share net
asset value (NAV) plus any shareholder fees that the fund imposes at purchase (such
as sales loads). (For NAV see the Next Slide)
Mutual fund shares are "redeemable": when the holder of the mutual fund shares
wants to sell those shares, he or she sells them back to the fund (or to a broker
acting for the fund) at their approximate NAV minus any fees the fund imposes at
that time (such as deferred sales loads or redemption fees).
Open-end fund shares cannot be bought or sold in secondary markets, such as the
New York Stock Exchange or the Nasdaq.

8. Continue….
 Net Asset Value (NAV) Net Aktif Değer
A mutual fund's price per share in both cases (. It is a price at which investors buy fund
shares from a fund company and sell them to a fund company).
 NAV = Market value of assets of scheme minus its liabilities.
 Price Per unit NAV
=
Net Asset Value
No. of Units Outstanding on Valuation date
For example, if a fund has assets of $50 million and liabilities of $10 million, it would
have a NAV of $40 million.
This number is important to investors, because it is from NAV that the price per unit of a
fund is calculated. By dividing the NAV of a fund by the number of outstanding
units, you are left with the price per unit. In our example, if the fund had 4 million shares
outstanding, the price-per-share value would be $40 million divided by 4 million, which
equals $10.


9. Continue….
 2) Closed-Ended Funds: A "closed-end fund" is also legally known as
a "closed-end company". It is an investment company that sells a fixed
number of shares at a one-time initial public offering. Shares are not
continuously offered for sale; after the public offering, the shares
typically can be bought and sold only on a formal exchange such as the
New
York
Stock
Exchange
or
the
Nasdaq.
 Once closed-end fund shares begin to trade, their prices are
determined by supply and demand and not by net-asset value (NAV);
therefore, the market price may be greater or less than the shares' NAV.
 Generally, a closed-end fund is not required to buy its shares back from
investors upon request. However, some closed-end funds, commonly
referred to as interval funds, offer to repurchase their shares at
specified intervals.

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 3) Interval schemes: combine the benefits of open end and closed
end schemes. These essentially are closed end funds , but become open
ended at pre specified intervals by opening for sale and repurchase on a
regular basis at intervals on pre-specified dates. Investors can buy or
sell the units of these schemes at an interval which is specified in the
schemes document. For example, in case of a Monthly Interval
Fund, investors can buy or sell the units every month on the specified
dates. The units can not be bought or sold on other dates. This means
the scheme is open end only on the specified transaction date and is
like a closed end fund on other dates.

11. Types of Funds By Investment Objectivities
 1) Money Market Mutual Funds:
 MMMF are funds which invest the majority of their
assets in short-term liquid financial instruments such as
commercial paper and government treasury bills
 Their goal is to obtain a higher return, after fees and
expenses, than traditional bank savings or checking
accounts.

12. Continue…..
 2) Bond fund or debt fund is a fund that invests in bonds, or other debt securities.
Bond funds can be contrasted with stock funds and money funds. Bond funds typically
pay periodic dividends that include interest payments on the fund's underlying securities
plus periodic realized capital appreciation. Bond funds typically pay higher dividends
than CDs and money market accounts. Most bond funds pay out dividends more
frequently than individual bonds.
 Bond Fund Types:
 Government: Primarily invest in bonds issued by the U.S. Department of Treasury as
well as various federal agencies. Government bonds are generally taxable.
 Municipal: Primarily invest in municipal bonds issued by state and local governments
and
their
agencies
to
fund
projects
such
as
schools, streets, highways, hospitals, bridges, and airports. Municipal bonds can be
insured or non-insured securities. Income generated from municipal bonds may be tax
free at both the federal and state level (consult the funds prospectus).
 Corporate: Primarily invest in bonds issued by corporations to help fund business
activities. Income from corporate bonds is taxable.
Bond fund shares are not guaranteed and will fluctuate with market conditions and
interest rates and include a greater risk to principal than Certificates of Deposit.
Shares, when redeemed, may be worth more or less than their original cost.

13. Continue…………
 3) Stock Funds:
 Stock mutual funds are funds which invest a majority of their assets in
common stocks of listed companies
These funds aim to grow faster than money market or fixed income
funds, so there is usually a higher risk that you could lose money.
 Stock Fund Types
A) Large Cap: Primarily invests in "Blue-chip" companies - large, wellknown industrials, utilities, technology, and financial services
companies with large market capitalization. Large cap stocks are
perceived to be less risky than smaller capitalized companies.
 B) Mid Cap: Primarily invests in companies whose market
capitalization is smaller than large caps but larger than small
caps. Mid caps are generally considered more risky than large cap
stocks but have a higher return expectation.

14. Continue……….
 C)
Small Cap: Primarily invests in emerging
companies, thought to have potential for future growth and
profit. Small caps are generally considered the riskiest
stocks compared to larger capitalized firms but carry the
expectation of higher returns. Small cap funds are subject
to greater volatility than those in other asset categories.
 D) International: Primarily invests in stocks traded on
foreign exchanges. International funds are subject to
additional risks such as currency fluctuation, political
instability and the potential for illiquid markets.

15. Continue…..
 4)Balanced Funds (Hybrid Funds):
A mutual fund that buys a combination of common
stock, preferred stock, bonds, and short-term bonds, to
provide both income and capital appreciation while
avoiding excessive risk.
 The purpose of balanced funds (hybrid funds) is to
provide investors with a single mutual fund
that
combines both growth and income objectives, by investing
in both stocks (for growth) and bonds (for income).
A well-managed balanced fund has the best chance at
achieving that because when the stock market falls, the
bonds tend to hold their value better, and when the stock
market rises, bonds yields are typically lower.

16. Special Funds
 1) Index Funds
Index Funds replicate the portfolio of a particular index such as the BSE Sensitive
index, S&P NSE 50 index (Nifty), etc. These schemes invest in the securities in the same
weightage comprising of an index. NAVs of such schemes would rise or fall in accordance
with the rise or fall in the index, though not exactly by the same percentage due to some
factors known in technical terms as a "tracking error". Necessary disclosures in this
regard are made in the offer document of the mutual fund scheme.
 2) Sector: Primarily invests in specific industry sectors such as
technology, financials, health, or energy. Since sector funds focus their investments on
companies involved in a specific industry sector, the funds may involve a greater degree
of risk that an investment in other mutual funds with greater diversification.

17. Factors to consider while choosing a Mutual Fund
 Expense Ratio
 Risk
 Past Performance

18. How Funds Can Earn Money for You
 You can earn money from your investment in three ways:
 Dividend Payments — A fund may earn income in the form of dividends and interest
on the securities in its portfolio. The fund then pays its shareholders nearly all of the
income (minus disclosed expenses) it has earned in the form of dividends.
 Capital Gains Distributions — The price of the securities a fund owns may increase.
When a fund sells a security that has increased in price, the fund has a capital gain. At
the end of the year, most funds distribute these capital gains (minus any capital losses) to
investors.
 Increased NAV — If the market value of a fund's portfolio increases after deduction of
expenses and liabilities, then the value (NAV) of the fund and its shares increases. The
higher NAV reflects the higher value of your investment.
 With respect to dividend payments and capital gains distributions, funds usually will give
you a choice: the fund can send you a check or other form of payment, or you can have
your dividends or distributions reinvested in the fund to buy more shares (often without
paying an additional sales load)

19. Summery of the conceptMutual funds

20. Exchanged-Traded-Funds (ETFs)
Borsa Yatırım Fonları
 An ETF is a security that tracks an index and represents a basket of
stocks like an index fund, but trades like a stock on an exchange, with
daily price fluctuations. The most widely known ETFs are SPDR
(Spider), which tracks the S&P 500 index, and QQQ, which tracks
the Nasdaq-100 Index .

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 The Exchange Traded Fund (ETF) project was initiated
by Finansportfoy in 2003 in response to a number of
factors:
 Turkey required new investment tools to increase
diversity for its investors.
 Extensive market analysis undertaken by Finansportfoy
indicated that ETFs would meet many of the markets
needs.
 Finansportfoy partnered with other globally recognized
institutions to deliver a world class product.
 In 2005 Finansportfoy launched Turkey’s first ETF Dow
Jones Istanbul 20 Type A Exchange Traded Fund (DJIST).

22. Creation and Redemption of ETF

23. Continue………………..
 While ETF trading occurs on an exchange like stocks, the process by which
their shares are created is significantly different. Unless a company decides to
issue more shares, the supply of shares of an individual stock trading in the
marketplace is finite. When demand increases for shares of an
ETF, however, Authorized Participants (APs) have the ability to create
additional shares on demand.
 Through an "in kind" transfer mechanism, APs create ETF units in the primary
market by delivering a basket of securities to the fund equal to the current
holdings of the ETF. In return, they receive a large block of ETF shares
(typically 50,000), which are then available for trading in the secondary
market. This ETF creation and redemption process helps keep ETF supply and
demand in continual balance and provides a "hidden" layer of liquidity not
evident by looking at trading volumes alone.
 This process also works in reverse. If an investor wants to sell a large block of
shares of an ETF, even if there seems to be limited liquidity in the secondary
market, APs can readily redeem a block of ETF shares by gathering enough
shares of the ETF to form a creation unit and then exchanging the creation unit
for the underlying securities.

24. Benefits Of ETFs
 Buy & Sell With Ease: ETFs can be traded through any broker with access to the
Borsa Istanbul. Retail investors can buy and sell ETFs via internet
banking, telephone banking etc.
 Operational Efficiency : Investors can trade ETFs with a single
transaction through any brokerage house.
 Diversification : ETFs are also investment instruments which can provide instant
exposure to a wide range of securities. Investors can diversify by choosing an index
ETF, rather than taking concentrated risks by purchasing individual securities.
 Cost Efficient: Management fees are lower for exchange traded funds.
 Continuous Monitoring: ETFs are priced based on their Net Asset Value; investors
can follow price movements continuously during trading hours.
 Transparency
ETFs’ holdings are published on a daily basis. It is easy for investors to see what
they own.

25. Types of ETF
 DJIST Exchange Traded Fund:
Dow Jones Istanbul 20 is the first Exchange Traded Fund (ETF) in
Turkey. DJIST tracks Dow Jones Turkey Titans 20 Index. Dow Jones
Istanbul 20 ETF (DJIST) allows investors to gain direct exposure
to largest and most liquid 20 blue-chips listed on the Borsa Istanbul
(BIST). DJIST exchange traded fund can be traded on the BIST just like
a stock and it can be bought and sold through any licensed bank or
brokerage house.
 Ease of Transaction:
DJIST shares can easily be acquired through the BIST . Institutional
investors can also create or redeem through the Takasbank system. It
is an ETF that is based on a liquid index that can facilitate good
executions even if the ETF itself trades infrequently.

26. DJIST Exchange Traded Fund Facts
Fund Name
Dow Jones Istanbul 20 Type A Exchange Traded Fund
Underlying Index
Dow Jones Turkey Titans 20 Index
Inception Date
January 14, 2005
INAV* Ticker (a telegraphic instrument that
automatically prints stock prices, market reports, etc.,
on a paper tape)
Bloomberg: DJIST TI
Euroline: DJISTI
Foreks: DJISTI
IBS: DJISTI
Matrix: DJISTI
Reuters: DJIST
INAV* Dissemination
15 Seconds
Management Fee
0.73% annual
Shares available for sale
120,000,000
Total size available for sale (TL)
2,504,116,332.5
Total size available for sale (US$)
1,196,996,334.8
Minimum creation unit
50,000
ISIN (International Securities Identification Numbe)
TRMCU1WWWWW3
Takasbank Ticker
DJA
* INAV: Intraday Net Asset Value

27. Istanbul Gold Exchange Traded Fund
(GOLDIST)
 GOLDIST is the first gold Exchange Traded Fund in Turkey. The fund
provides exposure to gold with a single transaction. As it is listed on the
BIST and traded like a stock through any banks and brokerage
houses, Goldist provides ease of transactions to investors. The fund
also eliminates the storage problem of gold.
 The aim of the Gold ETF is to track and reflect the price of gold
 How to Buy & Sell
GOLDIST is listed on the Istanbul Stock Exchange. GOLDIST can be
traded through any broker with access to the BIST. Retail investors can
buy & sell GOLDIST through internet banking, telephone banking etc

28. GOLDIST Exchange Traded Fund Facts
Fund Facts
Fund Name
Underlying Index
Inception Date
ISE Ticker
INAV* Ticker
INAV* Dissemination
Management Fee
Shares available for sale
Total size available for sale (TRY)
Minimum creation unit
ISIN
* INAV : Intraday Net Asset Value
Istanbul GOLD B Type Gold ETF
Istanbul GOLD ETF Index
September 28, 2006
GLDTR
Bloomberg : GLDTR TI
Reuters INAV : GLDTR
Reuters PCF : GLDTS
Matriks : GLDTRI
Foreks : GLDTR
15 Seconds
0.47% (annualy)
75,000,000
519,649,368.64
1,000,000
TRYFNBK00055

29. FBIST Exchange Traded Fund
 FTSE Istanbul Bond ETF (FBIST) tracks the FTSE Turkish Lira
Government Bond Index. Provides exposure to a basket of Turkish
fixed income securities with a single transaction. FBIST exchange
traded fund (ETF) can be traded on the Borsa Istanbul (BIST) just like a
stock and can be bought and sold through any licensed bank or
brokerage house.
 Ease of Transaction:
FBIST shares can easily be acquired through the BIST. Institutional
investors can also create or redeem through the Takasbank system.
 FBIST offers liquidity for institutional investors through a creation-
redemption process. It is an ETF that is based on a liquid index which
can facilitate good executions even if the ETF itself trades infrequently.

30. Individual Bonds and ETF Bonds
 Fixed Income ETFs usually distribute monthly dividends
which can include both interest income on the underlying
bonds and capital gains (if any). Most bonds pay interest
semi-annually.
 Unlike bonds, ETFs have no maturity date. Although bonds
in the fund mature eventually, the proceeds are reinvested
in new bonds rather than returned to investors.
 ETFs trade on stock exchanges, whereas bonds are
generally bought and sold through dealer firms.

31. FBIST Exchange Traded Fund Facts
Fund Name
FTSE Istanbul Bond ETF
Underlying Index
FTSE Turkish Lira Government Bond Index
Inception Date
October 24, 2007
BIST Ticker
FBIST
INAV* Ticker
Bloomberg: FBIST TI
Euroline: FBISTI
Foreks: FBISTI
IBS: FBISTI
Matrix: FBISTI
Reuters: FBIST
INAV* Dissemination
15 Seconds
Management Fee
0.51% annual
Shares available for sale
5,000,000
Total size available for sale (TL)
1,004,131,406.1
Minimum creation unit
10,000
ISIN
TRYFNBK00097
Takasbank Ticker
* INAV: Intraday Net Asset Value
FBS
Minimum creation unit
10,000

32. IST30 Exchange Traded Fund
 IST30 Exchange Traded Fund is the first financial instrument to
provide trading of the BIST 30 index with a single transaction on both
the spot and futures markets. IST30 consists of the top 30 publicly
listed stocks on the Borsa Istanbul. In contrast with index mutual
funds, IST30 can be traded using any brokerage house and has lower
transaction costs
 IST30 is the first Exchange Traded Fund (ETF) based on BIST30
National Index (BIST30) in Turkey. With IST30 Exchange Traded
Fund (IST30) it is easy to buy the stocks in the BIST30, by buying and
selling at the market price you can save both time and costs. IST30 can
be traded on the BIST just like a stock and can be bought and sold
through any licensed bank or brokerage house.

33. BANKA Exchange Traded Fund
 BANKA Exchange Traded Fund is intended for investors seeking to profit from the
banking industry in Turkey. With a single transaction it enables investment in the
stocks of the six publicly traded banks in Turkey with the highest market
capitalization.
 With BANKA, you can trade 6 bank equities with the highest market
capitalizations on the Borsa Istanbul (BIST). Turkey Large-Cap Banks Index is
calculated, maintained and disseminated by Dow Jones Indexes, one of the
leading index providers in the world.
 BANKA Exchange Traded Fund can be traded on the Borsa Istanbul (BIST) just like
a stock and can be bought and sold through any licensed bank or brokerage house.

34. GT30 Exchange Traded Fund
 GT30 Exchange Traded Fund is based on the GT-30
Index. It includes equities of 15 prominent companies
trading on the BIST in Turkey and 15 trading on the
ATHEX in Greece and is traded just like a stock. GT30
is created by Finansbank and managed by Finans Asset
Management.

35. Istanbul Silver Exchange Traded Fund
 Istanbul Silver Exchange Traded Fund offers 100%
replication of the international price of silver and is
listed on the Borsa Istanbul. The fund’s holdings are
physically held at the Borsa Istanbul Precious Metals
and Diamond Market. SILVER Exchange Traded Fund
can be traded through any broker with access to the
Borsa Istanbul. Retail investors can buy and sell the
exchange traded fund through internet and telephone
banking.

36. Thanks