Possible Contributions of the Turkish Wealth Fund to the Development of Islamic Financial Instruments

Sovereign Wealth funds (SWF) have emerged as a new type of asset management distinct from traditional public pension funds and the supporting formations of the national currency. SWFs are generally financial formations under public auspices or control that invest abroad. While determining more areas of activity, it was understood that the uvfs were formed in accordance with the cyclical and future needs of the countries in which they were founded. The first example of sovereign wealth funds is the Perment School Fund (PSF), which was established in 1854 in the United States - Texas, but the first sovereign wealth funds known today is the Kuwait Investment Board, which was established in 1953 by Kuwait. In general, the sources of sovereign wealth funds are balance of payments surpluses, official foreign exchange transactions, privatization revenues, budget surpluses and/or foreign currency surpluses arising from commodity exports. Although UVFs appear to be part of countries central banks or official foreign exchange reserves, they have characteristics that make them different. Turkey Wealth Fund Management Joint Stock Company, the first sovereign wealth funds of our country, was established in August 2016. ” The main activity of the company is the establishment and management of the Turkey Wealth Fund (TWF) and its sub-funds in order to contribute to the variety and depth of instruments in the capital markets within the framework of the provisions of the relevant legislation, to acquire publicly owned assets in Turkey to the economy, to outsource them, to participate in strategic and large-scale investments. Turkey s significant assets transferred to TWF have reached an asset size of approximately $ 40 billion. Many objectives have been identified as the rationale for the establishment of the TWF. One of the most notable of these is “supporting the development of assets suitable for participation financing”.The use of Interest-Based Financial Instruments is not preferred by Muslims because interest-based transactions are prohibited in Islam. Due to the growing economy of the Islamic world and the increasing need for funds, the development of financial instruments in accordance with Islamic procedures has become mandatory. Within this framework, an Islamic financial instrument called the Sukuk has been developed. As it is known, Islamic financial instruments have been used in the world for a long time under the name of sukuk, but it is a new and need to be developed for our country. Sukuk is divided into 14 different subspecies and the most commonly used species are Mudaraba, Muşaraka, Murabaha, Salam, Icara, exception and Wakala. In Turkey, Rent Certificate has been developed in exchange for sukuk and is divided into 5 types. In this study, asset funds will be examined and the possible contributions of the Turkish asset fund to the development of Islamic financial instruments are examined and propositions are presented.