Frequently Asked Questions - Alternative Investment Products

What are the advantages of principal protected and guaranteed funds?

Principal protected and principal guaranteed funds ensure that investors make their investments without the risk of losing their initial investments based on the principal protected/guarantee benefit they offer. In addition, these funds invest in national and international investment instruments and provide alternative income options with the products they contain.

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What does 100% principal protection aim mean?

The aim of the fund is to repay the full principal amount of the investor on due date, in addition to a benefit from the rising prices of the derivatives contained in the fund, proportional to their contribution.

To provide protection of the principle, treasury bonds or government debentures with an outstanding validity of about 1 year are purchased. The remaining amount is used for buying an option contract consistent with the validity of the securities with fixed income.

Upon earlier withdrawal from the fund, transaction will be performed at prices prevailing at the date of withdrawal, and therefore, protection of the principal may not be ensured.

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For which dates will principal protection be valid and how will it be provided?

Principal protection target is valid only for investors holding their contributions until the end of the declared period of validity. Investors intended to withdraw earlier may withdraw on the value of the fund calculated within the period in question.

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How are protected/guaranteed funds purchased?

Protected funds are purchased by "public offer". Time will be the priority in public offer (first in first buyer system). Calls for demand will continue during public offer. It is not possible to buy a fund until the end of maturity, except the period of public offer.

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What is participation rate and how is it calculated?

Participation rate is the amount of options per unit share and found by dividing the amount outstanding for buying options with the option price. This ratio defines the rate of participation of the investor in the income that may be obtained by the fund.

For example, if a fund of TL 100 invests TL 90 in government debentures and buys an option with the remaining TL 10, and if the option price is TL 16, the contribution rate will be 10/16 = 63%. The product of the probable income with 63% gives the amount to be earned in addition to the principal. This example is indicative only and intended for information purposes.

Participation rate is fixed for the end of the validity and may vary during the period of validity depending on market variations. The actual participation rate will be announced after the creation of the fund portfolio.

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How taxation is made for principal protected and guaranteed funds?

As with other investment funds, no tax withholding will be made on the income obtained by sale of fund participation certificates by full and limited taxpayers. Unincorporated full and limited taxpayers and other corporations will be subject to 10% tax withholding. In addition, incomes obtained by individuals who are full or limited taxpayers upon sale of investment fund participation certificates, including ETF will be subject to 10% tax withholding.

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Does management fee and other expenses affect principal protection guarantee?

Management fee and other expenses will not affect the principal protection guarantee. Since investment is made in securities with fixed income in such amount as will protect the amount of principal until the end of validity, such expenses will not affect the protection of the principal.

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How and when withdrawal from the fund is made? How is the share price calculated in the event of earlier withdrawal? Will early withdrawal commission be payable? Is partial withdrawal possible?

The fund price is calculated twice a month.
Share price is calculated on the market value of the fund.
Upon earlier withdrawal from the fund, no earlier withdrawal commission will be payable.
Investors may order for withdrawal in any amount they wish.

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What is the difference of Hedge Fund from other funds?

  • Hedge Funds are sold only to "qualified investors".
  • Different from other investment funds, a performance fee is collected for Hedge Funds.
  • The fund is capable of using leverage up to 3-fold of its total value.
  • These funds provide the opportunity of short selling and taking short position. (By short selling these funds can make use of alternatives in the market.) This feature enables investors to earn even in falling markets.
  • Entry into the fund is possible every month. Withdrawal is possible at the end of quarterly periods.
  • There is a threshold limit for entry into these funds: TL 100.000

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How is Hedge Fund taxed?

As with other investment funds, our investors resident in Turkey will be subject to 10% withholding if the fund is sold back. Foreign entities and individuals are exempted from 10% withholding on incomes from the fund.

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How much are the management and performance fees of Istanbull Hedge Fund?

  • Fund Management Fee

    • A fund management fee is collected at a rate of 0.00411% (four points eleven per one hundred thousand) daily, that is, 1.5% annually on total value of the fund.

  • Fund Performance Fee

    • KYD O/N Repo Index Gross value is used as the performance fee criteria. A performance fee will be collected at a rate of 20% on the income from the fund realized above KYD O/N Repo Index Gross value to be calculated during the holding period on fund participation certificate basis at the end of each calendar year (the last business day of the 12th month)

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    What are the trading conditions of Istanbull Hedge Fund?

    • Entry into the fund is possible once a month. Withdrawal is possible at the end of quarterly periods.
    • Purchase orders to the fund may be given until 13.00 hrs on the last business day of every month. Investors are given their fund participation shares on the 5th day at the price to be calculated at the end of the 4th business day of the following month.
    • Participation share sale orders given by investors until 13:00 hrs at the end of quarterly periods, namely, the last business day of March, June, September, December will be honored on the 5th day at the price to be calculated at the end of the 4th business day following the date of sale order.

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    How investors of Istanbull Hedge Fund can monitor performance?

    With a monthly information report, investors can see the performance of the fund in that month. Consequently, in a Hedge Fund not declaring daily prices, performance will be monitored monthly through the aforementioned reporting.

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