By Richard Loth (Contact | Biography)

The Morningstar and Value line mutual fund reports all present current and historical portfolio turnover figures. This is a useful piece of comparative data. (See sample Morningstar and Value Line reports.)

This is the entry we need to complete in the Fund Investment Quality Scorecard for an analysis of a mutual fund's portfolio turnover:



Targets for portfolio turnover in a managed stock fund would peg the current percent­age at or below 30% for a high evaluation and at or below 60% for an above-aver­age evaluation. In addition, the fund's turnover rate should be substantially below its peer group. The fund's current and historical portfolio turnover rates should be comparable, and if the former is lower, so much the better. If these investment qualities are evident, the fund should get a positive rating in this aspect of its operations.

Hopefully, you now have a better appreciation of what portfolio turnover is all about. This seemingly minor percentage figure tells us a lot about a fund manager's commitment to con­taining costs, which, if the job is well done, makes a fund more profitable and investor friendly.

Return to the Main Menu.
Proceed to the next chapter on Fund Costs and Expenses.




Table of Contents
  1. Portfolio Turnover
  2. Fund I-Q No. 5: Portfolio Turnover Ratio
  3. Scoring Fund Turnover Data


comments powered by Disqus
Trading Center