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What is portfolio turnover in a mutual fund?

Do you belive • The Asset management Company(AMC) of the Mutual Fund should balance should balance the cost of port folio turnover with higher returns. • Is investing in overseas financial assets by the AMC a risky option.

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Question ajoutée par Subhranshu Ganguly , Quality Analyst. , WIPRO
Date de publication: 2013/12/13
Imtiyaz Qureshi
par Imtiyaz Qureshi , Director , INVESTERIA FINANCIAL SERVICES PRIVATE LIMITED

Portfolio turnover is calculated by taking either the total amount of new securities purchased or the amount of securities sold - whichever is less - over a particular period, divided by the total net asset value (NAV) of the fund.

Turnover ratio is a measure of how a fund's portfolio changes in a year. This ratio indicates how much a fund is trading. Understanding turnover ratio helps in gaining insights into a fund's performance.

A turnover of 100% means that a portfolio is completely reconstituted in one year. While most individuals are investing for the long term, it looks like the investment horizon for the average managed mutual fund is closer to one year.

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