Turkey’s investment fund sector is facing a deepening crisis after regulators last month ordered the liquidation of 131 funds managed by seven asset managers, following warnings that some managers could not meet redemption payments. The funds accumulated more than $20 billion in assets over three years as almost 500,000 investors sought returns that could offset a weakening lira and high inflation. Some funds concentrated holdings in individual assets or thinly traded small-cap shares, amplifying reported returns and raising manipulation concerns. Tera Portfoy and Pusula Portfoy expanded rapidly, with Tera’s assets reaching $14.3 billion and Pusula’s $13.2 billion by August 2026. Tera’s TLY hedge fund posted a cumulative lira return of more than 15,000% by September and attracted 102,616 investors. Authorities have widened the investigation to 217 suspects, including 56 people jailed pending trial. The Capital Markets Board, or SPK, said liquidation will take six months, while repayment rules will depend on investor balances. Analysts at JPMorgan said the turmoil creates meaningful downside risks to Turkey’s 2026 GDP growth forecast of 3%, although the total investor loss remains unclear.