Portfolio Turnover

Portfolio turnover is a measure of how frequently assets are bought and sold within an investment portfolio over a given period, typically a year. It's expressed as a percentage of the total portfolio value.

A high turnover rate indicates an active trading strategy, while a low turnover rate suggests a more passive, buy-and-hold approach. High turnover can lead to increased transaction costs, including brokerage fees and taxes.

It can also indicate a lack of conviction in investment choices. Low turnover generally results in lower costs but may also mean missed opportunities.

Portfolio turnover is often used to assess the efficiency of a portfolio manager. It can also provide insights into an investor's trading style.

Different investment strategies naturally have different turnover rates. For example, day traders have extremely high turnover, while index funds have very low turnover.

Understanding portfolio turnover is important for evaluating investment performance and costs.