What is 'Annual Turnover'
Annual turnover is the percentage rate at which a mutual fund or exchangetraded fund replaces its investment holdings on an annual basis. Turnover is meant to adjust for the inflows and outflows of cash and report on the level of trading activity in the fund.
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BREAKING DOWN 'Annual Turnover'
Annual turnover is a good way to inspect the average time horizon a fund employs. Higher turnover levels will generally add to the expense ratio of a fund and could increase capital gains distributions.
Benchmark funds like the S&P 500matching SPDRs have very low turnover, usually less than 10% per year. On the other end of the spectrum, some funds employ highly active trading strategies that push annual turnover past 100% per year (100% is a full turnover of the portfolio).
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How should I use portfolio turnover to evaluate a mutual fund?
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What is a good turnover ratio for a mutual fund?
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What is considered a good turnover ratio for a mutual fund?
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