Portfolio turnover rate

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Portfolio turnover rate

For an investment company, an annualized rate found by dividing the lesser of purchases and sales by the average of portfolio assets.

Portfolio Turnover Rate

The ratio at which a portfolio trades the securities in it. A higher turnover rate indicates active management; if it becomes very high, this may indicate that the broker or manager is trading securities for the sake of collecting more fees. It is calculated as the trading volume of the portfolio as a percentage of the entire portfolio. See also: Prudent person rule.
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The results contribute to the literature by demonstrating the determinants of the portfolio turnover rates and the factors that distinguish investment funds.
Since the portfolio is regularly rebalanced, this may result in higher portfolio turnover rates, higher expenses and potentially higher net taxable gains or losses compared to a "buy and hold" or index strategy.
First, Bloomberg screened for above-average five-year performance in each fund category then made two further cuts to eliminate funds whose expenses or portfolio turnover rates were above average.