What is a Private Fund?
Funds, whose shares are assigned to predetermined persons or institutions and which are founded by the Portfolio Management Company in its capacity as Founder are called “Private Funds”. The expression “Private” in captions is used for these funds.
Private Fund Investors
The Private Fund is an appropriate investment tool for persons and institutions which have a certain amount of cash assets and a long-term perspective.
Private Fund – Privacy
The investors of Private Funds are not required to be announced to the public during its founding; it is sufficient to give notice to the SPK in the founding stage.
Private Fund – Safe Investment
The Private Fund’s assets including public receivables cannot be hypothecated, cannot be subjected to cautionary judgment and cannot be included in the bankruptcy estate. The fund’s assets are kept in the care of the settlement and Takasbank (clearing house of Turkey) through depository institutions. Investor fund participation rates are monitored at MKK on their behalf.
Private Fund – Liquidity
The shares of the Private Fund can be converted into cash at any time and in any amount on the condition of being returned to the Founder. The Founder is liable with liquidating the fund shares within the notice period specified in the fund registration statement.
Private Fund – Strategy (All in One)
The Private Fund is founded with an investment strategy specified in line with the risks and expectations of the investor. One of the major advantages of the fund is that it allows implementing different investment strategies in a single fund and that it is possible to change the strategy in case of any need.
Private Fund – Strategy (Foreign Currency – equity )
The Private Fund can be founded as any type including hedge funds according to SPK legislation; it can also be established as “Foreign Currency” or “equity” fund depending on the investment strategy.
Private Fund – Tax – (General)
All income derivated from Private Funds is subject to taxed with a 0-10% withholding deduction at source according to fund type without making a declaration.
Private Fund – Tax (Eurobond)
For individual Investors, Foreign Currency Private Fund investments provide significant tax advantages for Eurobond investors. Income from transactions in Eurobond investments are calculated and declared on a Turkish Lira basis. Fund investments are not subject to declaration and in the sale of fund shares on income based on foreign currency, a 10% withholding is paid.
Private Fund – Tax (Withholding)
While short-term deposit and swap transactions are taxed with a 15% withholding, investments made within the fund are not subject to withholding. Therefore, fund investors have a 5% withholding advantage in deposit and swap transactions.
Private Fund – Compound Return
Private Fund investors are subject to a 10% withholding cut tax on their income only in the case of sales of the fund shares. Therefore, amounts where deductions from source are made such as deposits, swaps, coupons, dividend income keep gaining advantage in the fund and provide a significant compound return advantage in long-term investments.