8/17/2023 0 Comments Turnover rate for mutual fundsThe turnover ratio can also give you an idea of what the fund’s investment strategy is, which is important for choosing funds that align with your goals and objectives. But the most expensive funds can easily have expense ratios over 1%. At the low end, you can find index funds with expense ratios around 0.50% to 0.10%. The expense ratio represents the percentage you pay to own the fund on an annualized basis. First, a fund that’s actively managed may charge a higher expense ratio to cover the fund manager’s services. It can also be helpful for managing investment costs.įunds that have higher turnover ratios, for example, can trigger higher costs for investors. The turnover ratio is important when evaluating mutual funds or ETFs because it can tell you a lot about how the fund and the fund manager operate. Why Turnover Ratio Matters for Mutual Funds If you divide $10 million by $40 million, you’d get 0.25, which means a 25% turnover ratio. The fund’s average assets were $40 million. So say you have a fund that bought and sold $10 million in assets over the previous year. You would then multiply the resulting figure by 100 to get the turnover ratio percentage. Next, divide the number you’ve chosen by the fund’s assets, based on the average value for the 12-month period. So if you’re estimating the turnover ratio yourself, choose the smaller figure for your calculations to ensure accuracy. It’s important to note that the Securities and Exchange Commission requires funds to calculate the turnover ratio using the smaller of those two numbers.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |