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September 2026 – On 28 August 2026, the Capital Markets Board of Türkiye (“CMB”) overhauled its Guideline on Investment Funds, publishing the changes in CMB Bulletin Issue 2026/54. The new limits took effect the following day, 29 August 2026, and introduce sweeping changes to regulations on Hedge Funds (Serbest Fon) and the Portfolio Management Companies (Portföy Yönetim Şirketi, “PMCs”) that manage them, in particular concerning investment diversification, capital adequacy and management of funds.
What are the specific changes?
Graduated Investment Caps in Issuers:
Graduated caps now limit how much of a publicly listed issuer’s free-floating shares a hedge fund, or a group of hedge funds managed by the same portfolio manager, may hold. The caps are tiered to the issuer’s free-float ratio as follows:
- free float below 25%: 8% cap (16% for the fund group)
- free float between 25% and 50%: 6% cap (12% for the fund group)
- free float between 50% and 75%: 4% cap (8% for the fund group)
- free float above 75%: 2% cap (4% for the fund group)
A 1% (2% for the fund group) free-float cap applies where the fund’s own investors hold management control over the issuer
Diversifying Fund Investments:
New limits and thresholds were introduced to ensure diversification of a fund’s investments:
- a 20% cap on total investments in instruments issued by issuers controlled by the person controlling the fund or the PMC
- a 10% cap on investment in the instruments of a single issuer — this calculation now also captures derivatives and swaps referencing that issuer, not only direct holdings
- a 20% cap on the total value of instruments each individually exceeding 5% of the fund’s portfolio value
- a 10% cap on a single issuer’s outstanding debt instruments; lease certificates based on management agreement (yönetim sözleşmesine dayalı kira sertifikası) are capped at 10%, other lease certificates at 25%
- a 15% cap on investment in other funds’ participation shares generally, and a 10% cap on investment in any single fund
- where a position reaches 5% or more of the fund’s value (on a rolling 30-day average), the underlying research and analysis report must be approved by the PMC’s general manager, with follow-up reporting on exposure, counterparty risk and concentration at least every 15 days
Fund Manager and Personnel:
- requiring a minimum of two portfolio managers per hedge fund, one designated as the “responsible” portfolio manager accountable for compliance with the fund’s investment strategy and disclosed limits
- capping the number of funds a single portfolio manager may run at 7 (hedge funds included, venture capital and real estate investment funds are excluded from the count), phased in via an interim cap of 10 funds until 1 January 2029 and 7 from 1 January 2031
- limiting the number of hedge funds a PMC may manage to no more than the number of portfolio managers it employs (existing PMCs exceeding this ratio have until 30 June 2029 to comply)
- weekly public disclosure requirements for hedge funds traded on the Turkish Electronic Fund Trading Platform (TEFAS); and
Portfolio Management Company Capital Requirements:
- minimum paid-in capital for PMCs raised to TL 500 million (approx. USD 10.4 million) for companies holding broad-authorisation licences, and TRY 250 million (approx. USD 5.2 million) for companies with limited-authorisation licences
- PMCs whose average monthly collective portfolio consists of more than 50% hedge funds must apply to the CMB to increase their issued share capital by 10% in cash, within 20 business days following the relevant year-end; the first assessment will be made as of year-end 2026.
Which types of funds do the regulations affect?
The new regulations impact Hedge Funds (Serbest Fon) and Portfolio Management Companies (Portföy Yönetim Şirketi) operating in the Turkish capital markets. FX hedge funds, foreign hedge funds, and money market/short-term hedge funds remain exempt from the investment caps described above.
Investments in shares included in the BIST 30 Index, in index funds and in market investment funds also fall outside the scope of the investment caps listed above.
Separately, the same Guideline update requires money market funds (other than participation funds) to hold at least 10% of their portfolios in government domestic debt instruments or Treasury-backed lease certificates, and caps their reverse repo transactions at 25% of fund value.
When do the changes come into effect?
The CMB has set a gradual implementation schedule for compliance. Existing hedge fund positions exceeding the new investment caps as at 29 August 2026 are treated as an immediate ceiling and may not be increased further.
Funds must then:
- reduce at least one third of the excess by 31 October 2026;
- reduce at least two thirds of the excess by 30 November 2026; and
- eliminate the excess entirely by 31 December 2026.
The new limit on the number of hedge funds a PMC may issue relative to its portfolio manager headcount took effect on 29 August 2026, with existing PMCs given until 30 June 2029 to come into compliance.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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