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.

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References in periodicals archive ?
Most ETFs are index funds with very low portfolio turnover and, therefore, very little in realized capital gains.
Limiting portfolio turnover and managing the type of income produced impacts tax levels assessed.
Management and the Fund's investment adviser do not anticipate any material portfolio turnover as a result of the proposed merger.
Portfolio Turnover and Volatility: The portfolio balance may fluctuate substantially during the revolving period following securitisation term outs, however, the manager must ensure the required minimum CE is met and that the portfolio parameters are met after a three-month grace period.
For example, regarding portfolio turnover and corresponding advisory fees, the SEC's posture is: Prove to us that your services are worth your fees -- you have too low portfolio turnover to merit such a fee!
Portfolio turnover -- This is how often the stocks in a portfolio are replaced every year.
With regard to changes in the composition of share ownership, the researchers focus on quasi-indexers, which include institutions that have diversified holdings and low portfolio turnover. These investors currently account for 60 percent of institutional ownership, and their ownership share has grown significantly since 2000.
Specifically, our overconfidence index includes manager's gender, manager's tenure, portfolio turnover, portfolio concentration, prior performance, and idiosyncratic risk.
This study investigates the determinants of the portfolio turnover indexes of actively managed stock investment funds in the Brazilian market.
We gave different weights to each parameter-40% to mid-cap and small-cap exposure, 30% to portfolio turnover ratio, 20% to cash holding and 10% to volatility in returns.
The good news is that services provided by a DIM are not considered designated investment alternatives subject to detailed participant disclosure about expense ratios, performance history, portfolio turnover rates, etc.