Page 20 - Turkinsurance Digital Magazine

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In short, just as in BES, we see significant growth potential In addition, BES offers another very significant advantage:
ahead in life insurance. We are working intensively to make the state contribution. Currently, a 30% contribution is pro-
the best use of this potential. vided. This contribution will become even more visible in a
period when inflation declines further. For example, in an
Which BES funds stood out in the first half of the environment with 10% inflation, the state contribution cor-
year? What kind of picture emerged in terms of re- responds to three times the inflation rate. This is an advan-
turns? tage found in very few systems worldwide. Even in OECD
countries, there is no incentive at such a high level.
Gold has been one of the most talked-about investment in-
struments this year. Especially in the first three months, it In summary, for anyone considering investing over a certain
significantly diverged from other investment tools. Both do- term rather than making short-term investments, BES has
mestic and international developments, along with political become a far more advantageous option compared to all oth-
uncertainties, triggered this movement. However, starting er alternative investment instruments.
from April, we observed that gold lagged somewhat behind
other investment instruments. For example, in the April– In terms of diversity in fund management and risk
June period, money market funds and funds investing in for- distribution, what kind of portfolio strategy do you
eign markets delivered higher returns than gold funds. recommend to participants?

In recent weeks —especially over the past month— gold has In my opinion, the question “Is it more advantageous to in-
started to come to the forefront again as uncertainties have vest within the system or outside of it?” has now lost its
increased once more. Overall, from the beginning of the year meaning. Because fund diversity has increased so much that
until now, gold funds have been the highest-returning funds. it is now possible to access almost every type of investment
Gold-containing funds have delivered returns at around instrument within the individual pension system. Do you want
70%. This is quite a high rate. to invest in gold? There are many BES fund options that
invest directly in gold. Do you want to turn toward equities?
However, we have observed strong returns in other funds as Staying within the system is still far more advantageous.
well. For example, one of our mixed funds achieved returns
of around 50%. Money market funds are also above 39%. We can clearly see this in the returns: Over the past 5 years,
Considering inflation, this corresponds to an average real re- the BIST 100 index has provided returns well above infla-
turn of about 14 points — which is quite satisfying. tion. While the BIST 100 is at around 860%, our equity
pension investment fund has reached levels around 1,627%.
Since the beginning of the year, about This is indeed a significant difference. However, what truly
36% of new entries into the system have matters here is creating a portfolio that fits the investor’s
been individuals under the age of 18. profile.

Is the tendency toward alternative investment in- A participant seeking high returns and a participant aim-
struments a discouraging factor for potential BES ing to preserve their principal have very different levels of
risk appetite. For this reason, we first conduct a risk profile
participants? How do you evaluate BES’s advantag- analysis. We classify participants into four different groups
es compared to these instruments? according to their risk level and offer tailored recommenda-
tions accordingly.
In fact, when you look at the interest investors show in cer-
tain funds, you can clearly see that BES holds a strong posi- Another element that supports this diversity is the right to
tion compared to alternative instruments. For example, the make changes. Participants have the right to change their
returns achieved in equity funds within the individual pension fund allocation 12 times a year. When we look at the rec-
system are far higher than what individual investors could ommendations made by our automatic fund coach within our
obtain on their own. When we examine the last 10-year pe- own system, although we are only in the eighth month of the
riod, while the BIST 100 has delivered around 1,400% re- year, on average we have suggested 5 changes. This actually
turns to its investors, equity-based BES funds have achieved shows that the system is functioning effectively. The goal is
returns of around 3,300%. not to make frequent changes, but to make the right change
at the right time. And this is precisely where the importance
Moreover, these funds are managed by professional portfolio of professional management comes into play. We believe we
management companies. In our case, for instance, we oper- are demonstrating strong performance in this area.
ate under the same roof as Garanti Portföy. Therefore, our
participants do not make investment decisions individually; How do you evaluate the interest of the younger
they invest through funds shaped by the strategic assess- generation in BES? What trends stand out in the
ments of professional managers. This is also a key factor saving and investment behaviors of Generation Z?
that increases returns.