2017/12
In this report, we are presenting a com-prehensive analysis of operations and fi-nancial data obtained from 49 asset
man-agement companies for the year 2017.
More information on datasets can be found on www.tspb.org.tr.
ASSET MANAGEMENT
Asset management companies’ main activi-ty is to establish and manage funds. Apart from managing investment funds, pension funds and investment trusts, asset man-agement companies also provide discre-tionary asset management services for individuals and corporations.
There are 49 asset management compa-nies operating as of December 2017, while
six of them are specialized in real estate asset management. The number of com-panies managing collective investment schemes or discretionary portfolios has increased by 5 within 2017. However, since one of those companies manages her portfolio collectively with a company oper-ating abroad, those assets are not included in the AUM figures.
Figure 1: Asset Management – Number of Investors
Source: TCMA 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000
2016/03 2016/06 2016/09 2016/12 2017/03 2017/06 2017/09 2017/12
Institutional Retail Investment Trusts Mutual Funds Pension Funds
At the end of 2017, the number of inves-tors increased to 3,344, while 2,578 of them are discretionary portfolio manage-ment customers. However, it should be noted that there might be double counting as some customers might have accounts in more than one institution.
Total assets under management increased by 30% compared to the end of 2016 and amounted TL 159 billion by the end of the year 2017, with an increase in both pen-sion and investment funds. Penpen-sion funds constitute half of the portfolio. With the help of the state contribution to individuals’
savings since 2013, the pension funds have been growing substantially. Moreo-ver, automatic enrolment was put in place for the private pension system starting from 1 January 2017, and assets managed under the auto-enrolment scheme reached TL 3.5 billion at the end of the year.
Investment funds total portfolio rose by 26% year-on-year to reach TL 59 billion by the end of 2017. While securities mutual funds’ portfolio grew by %15, the growth
in alternative funds was more pronounced.
Real estate investment funds’ portfolio has increased from to TL 2.5 billion from TL 87 million. While the number of hedge funds es-tablished for specific investors.
TL 19 billion of the total assets under man-agement belong to retail and institutional investors who receive discretionary portfo-lio management services. AUM figures in-clude those clients’ investments funds as well. As of the end of 2017, while the av-erage portfolio size of retail investors (2,343 investors) receiving discretionary portfolio management services is TL 2 mil-lion, this average is TL 62 million for cor-porate investors (235 institutions).
While the market cap of total portfolio of investment trusts has nearly reached TL 30 billion, asset management companies manage only TL 500 million of this amount.
Figure 2: Assets under Management (billion TL)
Source: TCMA
2016/03 2016/06 2016/09 2016/12 2017/03 2017/06 2017/09 2017/12
Institutional Retail Investment Trusts
Mutual Funds Pension Funds
Market concentration remains high as İş Asset Management holds 21% and Ak As-set Management holds 16% of the total portfolio. Bank-owned top four asset man-agement companies (İş, Ak, Yapı Kredi and Garanti Asset) have 61% share in assets under management. The publicly owned banks’ asset management subsidiaries (Ziraat, Vakıf, and Halk Asset) followed these institutions with 18% share.
As of end-2017, 25 asset management companies are managing pension funds.
Bank-owned asset management companies account for a large share. The top 5 firms (Ak, İş, Garanti, Yapı Kredi and Vakıf As-set) have 75% of assets under manage-ment. The independent firms represent only 2% of assets.
The number of asset management compa-nies which manage mutual funds has
in-creased by 4 to reach 47. 2 bank owned companies (İş and Yapı Kredi Asset) hold 40% of the mutual funds’ portfolio while 18 bank owned companies constitute 91% of total mutual fund’s portfolio.
There is also a high concentration in dis-cretionary asset management which is provided by 31 companies at the end of 2017. Three bank-owned asset manage-ment companies (Ziraat, İş and Ak Asset) hold %62 of the discretionary portfolio.
The market share of independent firms in discretionary asset management is 25%, which is substantially higher than their share collective portfolio management. The market share of independent firms reach
%42 when only the retail investors’ portfo-lio is taken into consideration.
EMPLOYEES
Figure 3: Asset Management Companies’ Employees
Source: TCMA 100 200 300 400 500 600 700 800
2016/03 2016/06 2016/09 2016/12 2017/03 2017/06 2017/09 2017/12
Male Female
The number of personnel in asset man-agement companies has increased only slightly to reach 735. While most of the the total assets under management.
Considering the gender distribution, it is noted that the female employees consti-tute only 35% of the workforce.
Table 1: : Asset Management Companies’ Employees Employee
Break-down Average No. of Employ-ees
2016/12 2017/12 2016/12 2017/12
CEO 48 49 1 1
%36 of asset management companies’
employees holds a master’s or PhD de-gree. Meanwhile, two thirds of the per-sonnel in the sector have over 10 years of experience.
The department distribution of personnel in asset management companies is pre-sented in Table 1. Portfolio managers constitute 29% of the total workforce, making portfolio management the most populous department. The average num-ber of portfolio managers employed is five. 20 companies have a domestic sales department, those companies
em-ploy on average four personnel in this department. Only one company has an international sales department which employs four people.
As per regulatory requirements, asset management companies are required to have in-house personnel or outsource fund services, research and risk man-agement services. Nearly half of the firms have these departments with an average of 2 personnel in fund services and 1 personnel each in research and risk management services.
FINANCIALS
As of end 2017 asset management compa-nies’ total assets reached TL 740 million.
94% of these assets consist of current as-sets. Since 90% of the liabilities consist of
equity, the debt ratio is quite low. As of end 2017, 26% of the total assets are held by the top 2 asset management companies (İş and Garanti Asset).
Table 2: Financial Statement of Asset Management Companies (million TL)
2016 2017 % Change
Current Assets 571.4 698.3 22.2%
Cash and Cash Equivalents 367.2 475.8 29.6%
Financial Assets (Short-term) 132.6 126.6 -4.6%
Other Current Assets 71.6 95.9 34.0%
Non-Current Assets 37.6 41.3 10.0%
Tangible Assets 10.8 10.4 -4.5%
Financial Assets (Long-term) 11.5 14.0 21.5%
Other Non-Current Assets 15.2 17.0 11.7%
TOTAL ASSETS 609.0 739.6 21.5%
Short-term Liabilities 48.6 65.9 35.6%
Long-term Liabilities 8.2 10.0 22.1%
Equity 552.2 663.8 20.2%
Paid-in Capital 358.4 378.6 5.6%
Adjustments on Equity 11.2 9.9 -11.7%
Share Premiums/Discounts 5.3 5.3 0.0%
Other Comprehensive Income 1.1 -1.5 -
Reserves on Retained Equities 71.2 81.7 14.7%
Retained Profit/Loss -5.8 25.2 -
Net Profit/Loss 110.7 165.1 49.1%
TOTAL LIABILITIES 609.0 739.6 21.5%
Source: TCMA
Operating Income
Income stream of asset management companies can be split into three catego-ries; portfolio management commissions, consultancy fees and fund sales reve-nues. In the Turkish asset management industry, nearly all of the income is gen-erated by portfolio management com-missions.
Asset management companies earned TL 430 million TL revenues in 2017. TL 282 million was generated by mutual funds’
management. In parallel to the growth of assets under management, commissions
generated by securities mutual funds grew by 21% to reach TL 236 million.
With the help of TL 23 million income generated by real estate funds; the in-crease in total revenues generated from mutual funds management rose by 34%
to TL 282 million.
While pension funds’ assets are higher than mutual funds, revenues from pen-sion fund management remained rela-tively lower. Income generated from pension funds also grew by 22% and reached TL 121 million. The total income
generated from discretionary asset man-agement was TL 24 million.
Portfolio management commission rates is calculated as 0.17% and 0.14% for
pension funds and discretionary asset management, respectively. This ratio is 0.53% for mutual funds.
Table 3: Breakdown of Asset Management Companies’ Revenues (million TL)
2016 2017 2017/2016
% Change Portfolio Management Commissions 333.7 429.9 28.7%
Collective Portfolio Management 313.5 406.0 29.5%
Pension Funds 99.4 121.4 22.1%
Mutual Funds 211.3 282.0 33.5%
Investment Trusts 2.8 2.6 -8.9%
Discretionary Portfolio Management 20.1 23.9 18.7%
Retail 9.8 12.5 28.1%
Corporate 10.3 11.4 9.8%
Investment Consultancy Revenues 3.5 3.7 5.0%
Mutual Fund Sales Revenues 0.0 0.1 -
TOTAL 337.2 433.7 28.6%
Source: TCMA
Mutual funds’ portfolio management rate is 0.95% for independent firms, which is nearly the double of the commission rates applied by bank owned companies (0.49%). At the end of 2017, the share of independent firms in total portfolio remains 9%.
For discretionary asset management, commission rates are 0.28% and 0.11%
for independent companies, and bank owned companies respectively. At the end of 2017, independent firms repre-sent 25% of the total discretionarily managed assets.
Since the share of independent compa-nies in total pension portfolio remain very low (2%), a meaningful comparison between management fees is irrelevant.
Expenses
Asset management companies’ adminis-trative expenses reached TL 289 million in 2017. Personnel expenses which rep-resent 59% of the expenses rose by 17%.
While the average number of employees in the sector rose slightly to 720, the average monthly cost of an employee rose by 17% during 2017 to TL 19,782.
On the other hand, the average monthly net profit per employee was TL 19,100.
Table 4: Income Statement of Asset Management Companies (million TL)
2016 2017 2017/2016
% Change
Sales Revenues (net) 915.5 711.7 -22.3%
Cost of Sales -568.5 -272.5 -52.1%
Gross Profit/Loss 347.0 439.2 26.6%
Marketing, Sales and Distribution Expenses -4.8 -7.0 46.9%
Administrative Expenses -255.1 -289.1 13.3%
Salaries and Fringe Benefits -146.1 -171.0 17.0%
Research & Development Expenses 0.0 0.0 -
Other Operating Income 20.0 27.5 37.2%
Other Operating Expenses -2.3 -5.4 135.5%
Operating Profit/Loss 104.8 165.2 57.6%
Income from Investment Activities 18.4 24.1 31.1%
Expenses from Investment Activities -3.7 -10.8 195.0%
Profit/Loss Before Financial Expenses 119.5 178.5 49.3%
Financial Income 25.2 31.7 25.8%
Financial Expense -1.8 -1.5 -20.2%
Profit/Loss Before Tax From Operations 142.9 208.7 46.1%
Current Tax Income / Expense -33.2 -46.6 40.5%
Deferred Tax Income / Expense 1.0 3.0 194.1%
Net Profit/Loss 110.7 165.1 49.1%
Source: TCMA
Asset Management Companies’ Net Profits The increase asset management
reve-nues was higher than the increase in costs, causing a 58% increase in operat-ing profits which reached TL 165 million at the end of 2017.
Asset management companies’ net in-vestment and financial revenues rose from TL 38 million to TL 44 million. As a result, net profit rose by 49% year-on-year to record TL 165 million.
Figure 4: Asset Management Companies’ Profits and Losses (million TL)
Source: TCMA
-50 0 50 100 150 200
2016 2017
Total Profit Total Loss Net Profit/Losses
In 2017, 21 firms out of the 49 asset man-agement companies recorded a loss. Total losses of those firms measured TL 23 mil-lion. On the other hand, 28 companies posted a total profit of TL 188 million.
Yapı Kredi and Ak Asset, which made the highest profits, recorded profits of TL 38 million and TL 34 million, respectively, and
accounted for 44% of the industry’s total profit.
With the rising net profit, the profitability of the asset management companies in-creased compared to the previous year as illustrated in the table 5.
Table 5: Profitability of Asset Management Companies
2016 2017
Return on Equity 23.6% 28.7%
Profit/Revenues 31.9% 37.6%
Source: TCMA
Büyükdere Caddesi No:173 1. Levent Plaza A Blok Kat:4 34394
TURKISH CAPITAL MARKETS ASSOCIATION +90 212 280 8567 +90 212 280 8589 info@tspb.org.tr