Saturday, January 8, 2011

Annual Turnover

A fund's Annual Turnover is the rate at which its portfolio is transacted or turned over. The turnover ratio is calculated as the value of buys and sells divided by the fund's total assets. The fund's turnover activity will give insights into its investment approach e.g. a low turnover ratio would indicate a longer average holding period - thus a longer term approach to investing, while a higher turnover ratio would indicate a more active trading approach to generating returns. As a rule of thumb funds with higher turnover ratios will tend to incur greater expenses from transaction costs.

Synonyms: Turnover rate, Turnover ratio, Portfolio turnover

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