C1T7L1 · Revised 2026-10-26

Decision and objectives

Practical task: Evaluate a fictional free fund for an investor with a short cash horizon

Objectives: Verify eligibility before performance analysis; Read free-fund leverage and liquidity provisions; Stress gross exposure and redemption constraints.

Required prior knowledge: C1T6L4. Classification: restricted. Revision: 2026-10-26. All fictional names, prices, rates, fees, calendars and tax schedules below are hypothetical unless explicitly identified as a dated document observation.

A free fund is a restricted fund category, not a synonym for a universally available high-return strategy. Eligibility is the first gate, followed by mandate, leverage, valuation and exit terms. If the investor cannot lawfully access the product or cannot tolerate its cash restrictions, a performance comparison cannot make it suitable.

Mechanics

Read the current qualified-investor framework and the distributor's documented status verification. The SPK release dated 2026-10-26 updates relevant criteria and removes a previous real-estate/venture-fund exception; this draft deliberately teaches no fixed amount. Status must be checked under the current applicable rules rather than assumed from an old screenshot.

A free fund can have a broad mandate within its documents, potentially including short positions, derivatives, concentration or conditional fees. Those permissions are not a description of every fund's actual strategy. Valuation frequency and redemption frequency can differ. A published monthly value does not imply cash can be withdrawn every month, and an allowed redemption can still be subject to notice or a gate under the specific terms.

Price and return drivers

Gross exposure sums the magnitudes of long and short economic positions; net exposure subtracts short from long under a stated common basis. A small net number can conceal large gross risk, financing, basis and short-borrow exposure. A gate limits the portion redeemable at an event; it postpones cash rather than preserving value. Position losses belong first to fund NAV, while any investor commitment beyond paid-in units must be read explicitly.

Worked case

Hypothetical fund NAV is TRY 1,000,000. Long equity exposure is TRY 1,500,000 and short exposure TRY 500,000: gross exposure is TRY 2,000,000 or 200% of NAV; net long exposure is TRY 1,000,000 or 100%. A uniform +10% move in both baskets creates long profit TRY 150,000 and short loss TRY 50,000, net TRY 100,000 before financing, borrowing, trading and fund fees. This simple uniform move does not capture the strategy's full risk.

A separate hypothetical redemption clause permits quarterly requests with 30 calendar days' notice and a 20% per-event gate on each request. A TRY 100,000 valid redemption request can initially release only TRY 20,000 under this invented gate definition. The remaining TRY 80,000 remains invested and exposed; it is not an immediately available receivable at a fixed guaranteed value.

Adverse case

Long holdings fall 20% while short holdings rise 20%. Long loss is TRY 300,000; short loss TRY 100,000; combined NAV loss TRY 400,000, or 40%, before funding and fees. Net exposure of 100% did not predict this divergent-basket outcome. If the investor now needs the entire requested TRY 100,000 but only TRY 20,000 is paid initially under the fictional gate, the immediate shortfall is TRY 80,000, even before any further valuation loss.

Practical use

Access is restricted and must be confirmed through an authorized distributor under current qualification rules. Obtain the issue/prospectus and KAP disclosures appropriate to the fund, including leverage, valuation, redemption, suspension, performance-fee and investor-agreement terms. Read whether fund-level borrowing can require anything beyond the investor's paid subscription; do not infer a capital call without an actual obligation. Cost analysis includes financing/borrow costs in NAV, embedded fees and any investor charges/tax. Actual tax requires income year, status, acquisition date and effective rule; no current rate is supplied.

Decision boundaries

A restricted strategy can fit eligible long-horizon capital when the investor can analyze its actual exposure and accept its exit terms. Qualification is a legal access condition, not evidence of suitability or expertise. Decline when eligibility is unverified, gross exposure cannot be reconstructed or a mandatory withdrawal precedes the first reliable redemption. A “market neutral” description should be tested against divergent factors, margin and funding shocks, not accepted from net exposure alone.

Practice and references

Exercise: hypothetical NAV TRY 500,000; long exposure TRY 600,000; short exposure TRY 400,000. Answer: gross exposure 200% of NAV; net long 40%. If longs fall 10% and shorts rise 5%, loss = TRY 60,000 + TRY 20,000 = TRY 80,000, or 16% before costs. Under an invented 25% gate on a TRY 40,000 request, initial cash is TRY 10,000 and deferred amount TRY 30,000. No actual free-fund terms are implied.

Takeaway: verify access and liquidity before evaluating a leveraged strategy's attractive history.

Reference guide: free-fund; gross-net-exposure; weighted-return; qualified-investor; free-fund; leverage; redemption-gate. Next: C1T7L2. Topic test.

Sources: SPK Communique III-52.1 — Articles 3–6, 14–15, 24–27; Annexes 2–3; date 2013-07-09; consolidated text lists amendments through 2024-03-01; checked 2026-10-26; SPK qualified-investor criteria press release — Entire release; criteria updates and GYF/GSYF exception removal; date 2026-10-26; checked 2026-10-26. Source records: sources.json. Check the cited rule dates and confirm current dealing terms before any transaction.

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