Portfolio turnover rate


Also found in: Acronyms.

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 portfolio turnover rate can be a little harder to track down (and they are not published for pension funds).
Investment advisers can dig beyond fund disclosures to detect market-timing by comparing a fund's current portfolio turnover rate to the fund's historic rate.
In addition to a lower portfolio turnover rate, index funds typically have lower management fees than do activity managed funds.
A high portfolio turnover rate, therefore, in addition to significantly reducing or even eliminating the tax deferral advantage, presents an additional disadvantage to a taxpayer with significant capital losses or a 31% tax rate.
The Fund's asset allocation will vary over time depending on market conditions and therefore the Fund's allocation to each investment component could change as frequently as daily resulting in a higher portfolio turnover rate than other mutual funds.
Several of the strategies utilized by the Fund may engage in frequent and active trading and have a high portfolio turnover rate, which may increase the Fund's transaction costs, may adversely affect the Fund's performance or may generate a greater amount of capital gain distributions to shareholders than if the Fund had a low portfolio turnover rate.
5 million due to the fair value mark-to-market adjustment, which was negatively impacted by higher projected borrowing costs and a slightly faster portfolio turnover rate, partially offset by the benefit of the growth in the portfolio, and other changes impacting the valuation assumptions.
A portfolio turnover rate of 200%, for example, is equivalent to the Fund buying and selling all of its securities two times during the course of a year.
Since the portfolio is regularly re-balanced, this may result in a higher portfolio turnover rate, higher expenses and potentially higher net taxable gains or losses compared to a "buy and hold" or index fund strategy.
The Fund may engage in frequent and active trading and may have a high portfolio turnover rate, which may increase its transaction costs, may adversely affect its performance and/or may generate a greater amount of capital gain distributions to shareholders than if the Fund had a low portfolio turnover rate.
A portfolio involved in short selling will likely have a high portfolio turnover rate which may result in tax consequences for investors.
The Fund also may trade its portfolio securities actively and frequently, resulting in an annual portfolio turnover rate of up to 100%.