Annual Turnover

What is 'Annual Turnover'

Annual turnover is the percentage rate at which a mutual fund or exchange-traded 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.


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 500-matching 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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RELATED FAQS
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    Learn about the turnover rate for mutual funds, and understand the effect higher turnover may have on fund performance and ... Read Answer >>
  2. What is a good turnover ratio for a mutual fund?

    Learn about mutual fund turnover ratios and why the ideal ratio may differ based on the type of mutual fund and your investment ... Read Answer >>
  3. What is considered a good turnover ratio for a mutual fund?

    Understand what the concept of turnover ratio represents in relation to a mutual fund, and how an investor can evaluate a ... Read Answer >>
  4. What does a high turnover ratio signify for an investment fund? (KNOW)

    Find out more about the turnover ratio, what the turnover ratio measures and what a high turnover ratio indicates about an ... Read Answer >>
  5. How can a mutual fund raise or lower its turnover ratio?

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