Türkiye offers foreign investors a wide range of investment opportunities beyond real estate. In addition to property investments, foreign investors may consider shares traded on Borsa İstanbul, investment funds, exchange-traded funds, government and corporate bonds, and other capital market instruments.

However, investing in the Turkish capital markets involves more than simply selecting an investment with potential returns. Foreign investors should also understand how investment accounts are opened, how assets are held in custody, the role of investment institutions, applicable tax considerations, market risks, investor protection mechanisms, and the legal remedies available if they suffer a loss or become the victim of an unlawful transaction.

This article provides an overview of investment funds and stock market investments in Türkiye, explains how foreign investors can access these markets, outlines the principal risks, and discusses the legal mechanisms that may be available when an investor suffers a loss or becomes involved in an investment-related dispute.

Important: This article is provided for general informational purposes and does not constitute investment advice or a recommendation to purchase or sell any financial instrument. The legal position must be assessed separately according to the circumstances of each individual case.

1. What Is Investing in the Turkish Stock Market?

Shares and other capital market instruments are traded through the markets operated by Borsa İstanbul (BIST).

When an investor purchases shares in a publicly traded company, the investor becomes a shareholder in that company. Depending on the investment, the investor may benefit from:

• An increase in the share price;

• Dividend payments;

• Rights arising from capital increases;

• Other shareholder rights.

At the same time, the investor may suffer losses if the share price falls, the company's financial position deteriorates, liquidity decreases, or market conditions change.

Therefore, investing in the stock market does not mean that the invested capital or a particular return is guaranteed by the Turkish State.

A decline in the market value of a share is legally different from a situation in which an investment institution unlawfully uses an investor's money or securities, carries out an unauthorized transaction, or otherwise breaches its legal obligations.

2. What Is an Investment Fund?

An investment fund is a collective investment structure in which money collected from multiple investors is managed professionally according to a predetermined investment strategy.

Depending on the type of fund, its portfolio may include:

• Shares;

• Government bonds and other debt instruments;

• Corporate bonds;

• Gold and other precious metals;

• Deposits and participation accounts;

• Repo transactions;

• Lease certificates;

• Other investment funds;

• Exchange-traded funds;

• Derivative instruments.

The return of an investment fund depends on the performance and value of the assets held in its portfolio.

For this reason, investors should not assess a fund solely on the basis of its historical performance. The fund's investment strategy, portfolio composition, risk level, fees, liquidity and applicable investment restrictions should also be examined.

3. What Is an Exchange-Traded Fund?

Exchange-traded funds, commonly known as ETFs, are investment funds whose participation units are traded on a stock exchange.

Instead of purchasing individual shares, an investor may purchase units of an ETF designed to follow a particular index, asset group or investment strategy.

This structure can provide investors with exposure to a diversified portfolio through a single investment instrument.

However, ETFs are not risk-free. The value of an ETF may decline depending on the performance of the assets or index that it tracks.

4. Can Foreigners Invest in the Turkish Stock Market?

In general, foreign individuals and companies that are not resident in Türkiye may invest in Turkish capital markets.

In practice, a foreign investor normally needs to open an investment account through a bank or investment institution authorized to provide the relevant investment services in Türkiye.

Depending on the investor and the investment institution, the account-opening process may require documents such as:

• Passport or identity document;

• Proof of address;

• Tax identification information;

• Banking information;

• Know Your Customer (KYC) documentation;

• Source-of-funds information;

• Corporate documents for legal entities;

• Powers of attorney and authorization documents where applicable.

Foreign investors should verify that the institution through which they intend to invest is authorized by the Capital Markets Board of Türkiye (SPK) to provide the relevant investment services.

It is particularly important to distinguish between an institution that is merely offering financial information and an institution legally authorized to provide investment services.

5. Where Are a Foreign Investor's Shares and Securities Held?

One of the important features of the Turkish capital markets is the centralized electronic registration and custody system.

Dematerialized capital market instruments are registered electronically through the Central Securities Depository of Türkiye (MKK).

Investment accounts are maintained through the relevant investment institutions, while securities are recorded within the MKK system.

This structure provides an important distinction between an investor's ownership of securities and the investment institution's own assets.

Foreign investors should therefore regularly monitor:

• MKK records;

• Investment account statements;

• Trading history;

• Purchase and sale orders;

• Money transfers;

• Portfolio statements.

Keeping independent records of transactions can also become extremely important if a dispute later arises.

6. Can Foreigners Invest in Turkish Investment Funds?

Foreign investors may invest in Turkish investment funds depending on the type of fund and the eligibility requirements applicable to that particular fund.

Not every investment fund is necessarily available to every investor.

Certain funds may be offered only to qualified investors, while some categories, such as real estate investment funds and venture capital investment funds, are subject to specific regulatory requirements.

Before investing, a foreign investor should therefore determine:

1. The type of fund;

2. Who is eligible to invest;

3. The fund's investment strategy;

4. Subscription and redemption rules;

5. Liquidity conditions;

6. Risk level;

7. Management and custody arrangements;

8. The fund's prospectus and internal rules;

9. Applicable taxation.

The fact that a fund has achieved high returns in the past does not guarantee that the same performance will continue in the future.

7. Principal Risks of Investment Funds

Investment funds are not the same as bank deposits.

The value of an investment fund may decline, and an investor may lose part or all of the invested capital depending on the characteristics of the investment.

The principal risks include:

Market Risk

If the shares, bonds or other financial instruments held by the fund lose value, the value of the fund may also decline.

Currency Risk

Currency risk can be particularly important for foreign investors.

For example, an investor whose base currency is EUR or USD may make a profit in Turkish lira terms but nevertheless experience a loss when the investment is converted back into euros or US dollars due to exchange-rate movements.

Liquidity Risk

Some financial instruments may not be capable of being sold quickly at the expected price.

Interest Rate Risk

Changes in interest rates may affect the value of bonds and other fixed-income securities.

Company-Specific Risk

If a fund has significant exposure to a particular company or group of companies, financial difficulties affecting those companies may negatively affect the fund.

Management Risk

The investment decisions made by the portfolio management company within the limits of the applicable legislation and fund strategy may affect the fund's performance.

Operational Risk

System failures, incorrect orders, cybersecurity incidents, unauthorized transactions or administrative errors may create additional risks for investors.

8. Fraud, Market Abuse and Unauthorized Transactions

Not every loss in the stock market is the result of unlawful conduct.

For example, the fact that a share price falls significantly does not, by itself, establish that the investor has a legal claim for compensation.

However, different legal issues may arise where there is evidence of:

• False or misleading information;

• Manipulative transactions;

• Artificially influencing market prices;

• Misleading investors;

• Unauthorized investment services;

• Unauthorized investment advice;

• Fake investment platforms;

• Fake brokerage websites;

• Unauthorized trading on an investor's account;

• Unauthorized withdrawal or transfer of money or securities.

Particular caution should be exercised when a person or platform promises:

• Guaranteed returns;

• Risk-free investments;

• Unusually high profits;

• Insider information;

• Guaranteed daily returns;

• A rapid doubling of the investor's money.

Before transferring money, investors should verify whether the institution is genuinely authorized to provide investment services in Türkiye.

9. Recent Regulatory Developments Concerning Investment Funds

The regulatory framework governing Turkish investment funds continues to develop.

Recent regulatory changes have included measures concerning risk management, transactions involving related parties, unusual price movements in certain exchange-traded fund interests, and valuation rules applicable to certain investment fund assets.

For this reason, investors should not rely solely on a fund's historical return when making an assessment.

The legal structure of the fund, its portfolio composition, valuation methodology, related-party transactions, liquidity and risk management mechanisms can also be relevant.

10. The Role of the Portfolio Custodian

Another important element of the Turkish investment fund structure is the portfolio custody system.

Under Turkish capital markets legislation, assets held by collective investment schemes are subject to custody arrangements designed to separate fund assets from the assets of the relevant management institution.

The portfolio custodian has various control and oversight responsibilities, including matters relating to:

• The issuance and redemption of fund units;

• Calculation of fund unit values;

• Compliance of portfolio transactions with applicable regulations;

• Monitoring the fund's portfolio;

• Protection and custody of fund assets.

Depending on the circumstances, the portfolio custodian may have liability for losses resulting from a failure to perform its statutory duties.

Consequently, when an investment fund investor suffers a loss, the legal analysis should not automatically focus solely on the portfolio management company.

The responsibilities of the:

• Portfolio management company;

• Portfolio custodian;

• Investment institution;

• Other relevant parties

may need to be examined separately.

11. What Can an Investor Do After Suffering a Loss?

The first question should be:

What caused the loss?

There is an important legal distinction between an ordinary investment loss and a loss resulting from unlawful conduct.

Example 1: Market Loss

An investor purchases shares and the share price subsequently falls by 40%.

The price decline alone does not normally establish a right to compensation.

Example 2: Unauthorized Transaction

An investment institution executes a transaction on the investor's account without the investor's authorization.

This may raise questions concerning unauthorized transactions and the investment institution's potential liability.

Example 3: Failure to Return Money or Securities

An investment institution fails to fulfill certain obligations to return money or deliver securities belonging to the investor.

Depending on the circumstances, mechanisms involving the Investor Compensation Center (YTM) and other legal remedies may become relevant.

Example 4: Fraudulent Investment Platform

An investor transfers money to a fake investment platform believing that it is a licensed financial institution.

This may constitute a fundamentally different legal situation from an ordinary investment loss and may potentially involve criminal proceedings, civil claims, precautionary measures and recovery proceedings.

12. What Is the Investor Compensation Center (YTM)?

The Investor Compensation Center (YTM) is a statutory investor protection mechanism in Türkiye.

It may become relevant when an investment institution fails to fulfill certain obligations arising from investment services, particularly obligations concerning the payment of money or delivery of capital market instruments under the conditions established by the applicable legislation.

However, an important distinction must be emphasized:

YTM does not guarantee investment performance.

It is not a general insurance system covering every investment loss.

A loss resulting from a decline in the market price of a share or investment fund is fundamentally different from an investment institution's failure to fulfill a qualifying payment or delivery obligation.

Accordingly:

"The value of my shares has fallen. Can I recover the loss from YTM?"

A market loss, by itself, does not generally fall within the scope of YTM compensation.

The applicability of YTM must instead be assessed according to the specific circumstances and statutory requirements of the case.

13. YTM Compensation and Civil Litigation Are Different Remedies

The existence of the YTM mechanism does not mean that an investor has no other legal remedies.

Depending on the circumstances, an investor may need to consider:

• A complaint to the relevant investment institution;

• An application to the Capital Markets Board;

• YTM procedures;

• Criminal complaints;

• Civil litigation;

• Compensation claims;

• Debt recovery proceedings;

• Interim injunctions;

• Preliminary attachment orders;

• Other asset-preservation measures.

The appropriate legal strategy depends on the cause and nature of the loss.

14. What Happens if an Investment Institution Becomes Insolvent?

If an investment institution becomes insolvent or enters liquidation, it is important to determine the legal status of the investor's assets.

MKK records, investment account statements, custody records and the institution's accounting records may all become relevant.

The legal framework governing investor protection contains mechanisms concerning certain money and capital market instruments that should have been held for investors but are not available to them due to the failure of the investment institution.

In such circumstances, investors should seek legal advice promptly, particularly where substantial sums or securities are involved.

15. Can a Foreign Investor Bring a Claim in Türkiye?

A foreign investor may, depending on the circumstances, have grounds to bring legal proceedings in Türkiye.

However, this cannot be determined solely by the fact that the investor suffered a loss in connection with a Turkish investment.

A preliminary legal analysis may need to determine:

1. Who the parties to the dispute are;

2. Where the investment institution is established;

3. Where the investment fund is established;

4. Which agreements were signed;

5. Which law governs the agreements;

6. Whether the agreements contain jurisdiction clauses;

7. Where the relevant transaction took place;

8. Where the investor's money was transferred;

9. Where the securities are held;

10. Which country or countries have jurisdiction over the dispute.

For foreign investors, international jurisdiction and applicable law can therefore be among the first legal issues that need to be examined.

16. Language and Documentation Issues for Foreign Investors

Documentation can become particularly important when a foreign investor does not speak Turkish.

Investors should retain copies of:

• Investment agreements;

• Account-opening documents;

• Fund prospectuses;

• Fund participation documents;

• Purchase and sale orders;

• Bank transfer receipts;

• MKK statements;

• Investment account statements;

• Emails;

• WhatsApp or Telegram communications;

• Investment recommendations;

• Advertisements;

• Presentations and promotional materials.

If investment decisions were influenced by information provided in English, Russian, German or another language, the content and context of those communications may become relevant in a subsequent dispute.

Where foreign documents are used in Turkish legal proceedings, translation, notarization, apostille or other formal requirements may also need to be considered depending on the nature and origin of the document.

17. Fake Investment Platforms: A Particular Risk for Foreign Investors

Foreign investors should be particularly cautious about online platforms claiming to provide investment services in Türkiye.

Fraudulent platforms may imitate the websites, logos or names of legitimate financial institutions.

They may contact potential investors through:

• Social media;

• WhatsApp;

• Telegram;

• Email;

• Telephone calls;

• Online advertisements.

They may claim to offer:

• Guaranteed returns;

• Professional portfolio management;

• Government protection;

• Risk-free investments;

• Special investment opportunities;

• Exclusive information.

Before transferring funds, the investor should independently verify the legal identity and authorization status of the institution.

If money has already been transferred to a fraudulent platform, the matter should not automatically be treated as an ordinary investment loss.

Depending on the circumstances, legal measures may include:

• Filing a criminal complaint;

• Notifying the relevant bank or payment institution;

• Seeking interim measures;

• Seeking preliminary attachment;

• Tracing money transfers;

• Identifying the recipients of the funds;

• Attempting to preserve or recover assets;

• Pursuing civil compensation claims.

In fraud cases, time can be critical, particularly where funds may still be located in identifiable bank accounts.

18. How Is an Investor Loss Legally Investigated?

When an investor seeks legal assistance, one of the first steps is to identify the precise source of the alleged loss.

Step 1: Review the Transaction History

MKK records, investment account statements and transaction histories should be examined.

Step 2: Determine Whether Unauthorized Transactions Occurred

The investor's instructions should be compared with the transactions actually executed.

Order records, electronic records and relevant communications may become important evidence.

Step 3: Review the Agreements

The investment services agreement, framework agreement, fund documentation and other contractual documents should be examined.

Step 4: Verify the Institution's Regulatory Status

The legal status and authorization of the relevant investment institution should be checked.

It is important to determine which investment services the institution was actually authorized to provide.

Step 5: Determine the Legal Nature of the Loss

The loss may have resulted from:

• Normal market movements;

• An unauthorized transaction;

• Breach of contract;

• Misleading information;

• Unlawful investment services;

• Fraud;

• Failure to return money or securities;

• Another legal violation.

This classification is essential because it determines which legal remedies may be available.

19. Why Is Evidence Important in Investment Disputes?

In a capital markets dispute, simply stating:

"I lost my money."

will generally not be sufficient to establish how the loss occurred or who may be legally responsible.

For example, if an investor claims:

"I was told that this stock would definitely increase."

the legal assessment may require determining:

• Who made the statement;

• When it was made;

• What exactly was said;

• Whether it was written or oral;

• Whether the statement was presented as investment advice;

• Whether the person was authorized to provide such advice;

• Whether the statement influenced the investment decision.

Investors should therefore avoid deleting potentially relevant evidence.

Important records may include:

• Messages;

• Emails;

• Bank receipts;

• Investment account statements;

• MKK records;

• Order confirmations;

• Screenshots;

• Advertisements;

• Voice or communication records that were lawfully obtained and can be used as evidence.

20. Legal Assistance for Foreign Investors

Investment disputes involving foreign investors can involve several areas of law simultaneously.

Depending on the circumstances, a dispute may involve:

• Capital markets law;

• Banking law;

• Contract law;

• Turkish obligations law;

• Corporate law;

• Criminal law;

• Enforcement and bankruptcy law;

• International private law.

Foreign investors may also require assistance with:

• Turkish legal documentation;

• Translation of documents;

• Notarization;

• Powers of attorney;

• Apostille procedures;

• Communication with banks and investment institutions;

• Communication with regulatory authorities;

• Court and enforcement proceedings.

21. Ten Important Points for Investors in Türkiye

Before investing in Turkish shares or investment funds, investors should consider the following:

1. Verify the authorization of the institution.

Make sure that the institution is legally authorized to provide the investment service being offered.

2. Understand what you are actually purchasing.

A share, investment fund, ETF, bond and derivative instrument have different legal and financial characteristics.

3. Read the fund's documentation.

Review its investment strategy, risk profile, fees and redemption conditions.

4. Do not treat historical performance as a guarantee.

Past performance does not guarantee future returns.

5. Be cautious of guaranteed-return claims.

Unusually high or guaranteed returns should be treated as a warning sign.

6. Verify where your money is being sent.

Do not transfer money merely because a person or website claims to represent a legitimate investment institution.

7. Monitor your MKK records.

Regular monitoring can help identify unauthorized transactions at an early stage.

8. Keep transaction records.

Save account statements, orders, correspondence and bank records.

9. Act quickly when you identify an unauthorized transaction.

Notify the relevant institution and seek legal advice where appropriate.

10. Consider legal and tax advice for substantial investments.

This can be particularly important for foreign investors dealing with complex investments or significant amounts of capital.

22. Conclusion

Türkiye's capital markets provide investment opportunities for both domestic and foreign investors.

Foreign investors may, subject to applicable requirements, invest in shares traded on Borsa İstanbul, investment funds, exchange-traded funds and other capital market instruments.

However, investing in the Turkish capital markets does not guarantee that the investor's capital will be preserved or that a particular return will be achieved.

It is essential to distinguish between:

an ordinary investment loss caused by market movements

and

a loss caused by an unlawful transaction, unauthorized use of an investment account, fraud, breach of contractual obligations or failure of an investment institution to fulfill its legal obligations.

These situations can lead to very different legal consequences.

For foreign investors, additional issues such as international jurisdiction, applicable law, contractual jurisdiction clauses, evidence, translation, notarization and enforcement of judgments may also need to be considered.

If an investor suffers a loss, the first step should be to determine how the loss occurred and which person or institution may have legal responsibility, rather than assuming that every investment loss is recoverable.

At Özocak & Altun Law Firm, we assist foreign individuals and companies with legal matters relating to investments in Türkiye, including disputes involving investment institutions, investor losses, contractual claims, compensation claims, enforcement proceedings and, where appropriate, criminal complaints and asset-recovery measures.

If you have experienced an investment-related loss in Türkiye, preserving MKK records, investment account statements, bank transfer documents, transaction records and communications can be particularly important before taking further legal action.

Frequently Asked Questions

Can foreigners buy shares in Türkiye?

Yes. Foreign individuals and companies can generally invest in Turkish capital markets, subject to the applicable account-opening, identification and regulatory requirements.

Can foreigners invest in Turkish investment funds?

Yes, depending on the type of fund and its investor eligibility requirements. Certain funds may be available only to qualified investors.

Can a foreign investor recover a stock market loss from the Turkish State?

A loss caused solely by a decline in the market value of shares or fund units is not generally a government-compensated loss.

What can I do if an investment institution refuses to return my money?

Depending on the circumstances, possible remedies may include regulatory applications, YTM procedures, civil claims, enforcement proceedings, interim measures and, where appropriate, criminal proceedings.

Does YTM compensate all investment losses?

No. YTM is not a general investment-loss insurance scheme. Its statutory scope concerns specific obligations of investment institutions and does not generally cover losses caused simply by market price movements.

Can a foreign investor sue an investment institution in Türkiye?

Potentially, depending on the parties, contracts, applicable law, jurisdiction clauses and the circumstances of the transaction. International jurisdiction should be assessed on a case-by-case basis.

What should I do if I have been defrauded through an investment platform?

Preserve all evidence, notify the relevant bank or financial institution as soon as possible, verify where the funds were transferred, and obtain legal advice regarding criminal complaints, asset-preservation measures, recovery proceedings and potential compensation claims.

What evidence should I keep?

Keep investment agreements, MKK statements, account statements, transaction records, bank receipts, emails, WhatsApp/Telegram communications, investment recommendations, advertisements and other documents connected with the investment.

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