Turkish Investment Fund Inc.

NAV: 21.38
Net Assets: 130.13 Million
Market Cap: 94 Million

Share Price: 15.50
Fund Dividend Yield 2.7%

37.9% Discount to NAV


Turkey TMC/GDP = 25%



GDP per capita has been steadily up trending over the last 10 years and has almost quadrupled from the 1961 low of 1556.00.  The total population is 74 million with a total GDP of 789.3 billion. There was an outperformance by TKF in the first half of the year against the benchmark peer Morgan Stanley Capital International Turkey Index (MSCI) until the month of June where the divergence became more obvious.
In the letter to the stockholders Arthur Lev, President and Principal Executive Officer provided some valuable insight. “Turkey has a strong entrepreneurial culture which has begun to think longer term given lower inflation and new regional opportunities. This is reflected in the stock market, with an interesting layer of companies in the mid- to small-cap range, which have been increasingly represented in the portfolio. Having said that, we believe Turkey is potentially entering a period of rising political risk. Over the past decade, the market has become increasingly comfortable with AKP stewardship of the economy and the current political modus operandi, which have been recognized in the sovereign debt upgrades by Fitch and Moody’s. This situation may change over the coming 12 to 18 months, with several elections, potential Constitutional reform, and the high probability that Recep Tayyip Erdogan will step down as prime minister when his third term expires. Further, the regional situation remains volatile with the growing conflict in Syria, ethnic struggles in Iraq, and elections in Iran. On a more constructive note, current events in the country and region could usher in a period of peace with the Kurds, as well as a potential solution to the recalcitrant issue of Cyprus. On balance, we believe political risk is rising for Turkey and hence a potentially rising risk premium in the Turkish market could be expected.”

Current members of the team jointly and primarily responsible for the day-to-day management of the Fund’s portfolio are Eric Carlson and Paul C. Psaila, each a Managing Director of the Adviser.

Two investment funds had perked my interest when going through SEC filings regarding Turkish Investment Fund Inc., one was Lazard Asset Management with a 5% stake and the other the City of London Investment Group PLC with 3.7% of the fund.

turkey-inflation-cpi On a promising note, Turkish inflation may finally be under control as shown in the last decade of under 20% CPI as well as government fiscal policy, specifically debt to GDP at a modest ratio under 50%.



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