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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT APRIL 2011
FINANS ASSET MANAGEMENT
C. Ozgur Guneri
Executive President
Finans Asset Management provides a wide
spectrum of products in the Turkish capital
markets with respect to varying risk profiles
of the investors.
Global financial crisis that started in 2008
changed the investment climate and
investment themes drastically. Increased
volatility and low interest rate environment
fuelled need for new investment products and
investment ideas. Some asset classes have
become more attractive not only for investors
but also for short-term speculators as well.
Declining interest rates increased global
liquidity and reduced opportunity cost for
investors. Lower interest rate environment also
forced investors to take risks which they were
not very keen on taking before.
In addition to these changes, investment
climate in Turkey changed further due to low
interest rate environment. Investors, who were
able to generate risk-free high real returns, now
face much lower nominal income and lower
real returns. This forces investors to explore
alternative ways to invest. However investment
habits of Turkish retail investors prevents them
to invest in higher risk products as mostly
widely used investment products were fixed
income products.
In 2007, Capital Markets Board issued a new
mutual fund legislation allowing banks to issue
capital protected funds. Capital protected
funds allowed investors make financial bets on
assets while their principal capital remained
loss free. Furthermore, low money market rates
have led to an increased awareness of the
capital protected funds in Turkey as investors
easily sacrifice the low interest rate returns to
get opportunity of gaining on the upside
potential of an asset with a comfort of not
losing money on this structure. Capital
protection gave investors the confidence of
trying capital protected funds and a whole new
family of investment products was born.
In Turkey total volume of the capital protective
funds has reached USD 3 billion in the last four
years and the outstanding amount is USD 1.8
billion as of March 2011. In the last few years,
capital protected funds mostly preferred
currency, emerging market stock indices and
commodity markets as their underlying assets.
Since the inception of first capital protected
fund in Turkey, over 100 funds have been
offered to investors and major investment
theme varied from basic capital protected
funds that offer the upside of a single asset to
very complex capital protected funds that offer
a combination of assets and strategies.
The structure of the capital protected fund
consists of a fixed income investment that
creates the capital protection and over-thecounter
option investment that creates the
investment strategy. Capital protected funds
have easy to understand and transparent
portfolio composition and are relatively easy to
create. However creating the investment idea
behind the product which offers potential return
is not always very easy. Furthermore,
measuring and managing risk of underlying
investment and/or overall portfolio is a crucial
step in product success. Implementing risk
management strategies allows fund managers
to develop and price underlying investment
strategy more efficiently.
Currently, there are 108 capital protected funds
are available in Turkey and total asset under
management is around USD 1,794 mn. Since
the beginning, banks in Turkey offered 201
capital protected funds to the investors and
total size of investment exceed USD 3,047 mn.
In the coming months, capital protected fund
segment is expected to grow further in line with
increasing investor awareness.
Capital protected funds attract investors who
are not willing to take higher risks however
offering the right product to the right investor is
a key factor for long-term success. Despite the
fact that capital protection is very attractive for
risk-averse investors they also would like to
enjoy real returns. This brings asset
management companies to provide different
investment themes for capital protected funds.
The most innovative asset management
company in Turkey, Finans Asset Management,
has been established in 2000 as a subsidiary
of Finansbank Group. FAM provides a wide
spectrum of products in the Turkish capital
markets with respect to varying risk profiles of
the investors. As a pioneer and financial
innovator FAM currently manages 7 exchange
traded funds, 23 mutual funds, 1 closed-end
fund and 5 pension funds with total AUM of
USD 850.
Finans Asset Management is also active in
capital protected funds segment as other new
investment product segments. 14 capital
protected funds were launched in the last 3
years. Total number of issues reached 8 in
2010. More importantly, capital protected funds
created by Finans Asset Management
performed very well and 10 of 14 funds issued
since 2008 returned higher than average time
deposit rate.
Investment methodology implemented by
Finans Asset Management involves selection of
investment strategy by the investment
committee and then transforming the
investment strategy into capital protected fund
structure. The capital protected fund structure
is also tested towards investor preferences of
the investors and final product development
strategy is developed. Finans Asset
Management will continue to focus on
developing capital protected funds that offer
not only capital protection but also attractive
returns.
CONTACT INFORMATION
Contact Name Mr. C. Ozgur Guneri E-mail ozgurg@finansportfoy.com Website www.finansportfoy.com
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