Portfolio turnover

Portfolio turnover.

Portfolio turnover is the rate at which a mutual fund manager buys or sells securities in a fund, or an individual investor buys and sells securities in a brokerage account.

A rapid turnover rate, which frequently signals a strategy of capitalizing on opportunities to sell at a profit, has the potential downside of generating short-term capital gains.

That means the gains are usually taxable as ordinary income rather than at the lower long-term capital gains rate. Rapid turnover may also generate higher trading costs, which can reduce the total return on a fund or brokerage account.

As a result, you may want to weigh the potential gains of rapid turnover against the costs, both in your own buy and sell decisions and in your selection of mutual funds.

You can find information on a fund's turnover rate in the fund's prospectus.

References in periodicals archive ?
The result may lead to an unprecedented level of portfolio turnover.
Cash holding and portfolio turnover are two areas where mutual fund firms give norms to fund managers.
Cash holding and portfolio turnover are two areas where mutual fund companies give clear guidelines to fund managers.
Portfolio turnover rate, which is a measure of how frequently assets within a fund are bought and sold by the managers, the range can vary.
It lists corporate, municipal, and government bond and money market funds alphabetically, and evaluates factors like fund type, overall investment rating, performance rating/points, three-year total return, expense ratio, standard deviation, cash percentage, and portfolio turnover rate.
The coefficients for expense ratio and portfolio turnover variables are not significantly different from zero.
Mutual funds are required by law to disclose a large amount of information, including information about fees and expenses and portfolio turnover.
50% annual fee, the portfolio loses value paying for expenses such as commissions and portfolio turnover.
Tax efficiency is essentially a function of a fund's portfolio turnover rate.
Thanks to Sloan's portfolio turnover tactics, Dreyfus Third Century fund (Nasdaq: DRTHX), which he co-manages, ranks in the top 25% for one-, three-, five-, and 10-year performance, has returned 30% in each of the past three years, topping the Standard & Poor's 500 index by roughly nine percentage points in 1999.
It may be a big chunk, by contrast, in a fund with high portfolio turnover.
government securities risk, equity securities risk, currency risk, distressed securities risk, preferred stock risk, inflation/deflation risk, market discount risk, leverage risk, derivatives risk, market disruption risk, portfolio turnover risk, and illiquid/restricted securities risk.