Q&A: What is a turnover ratio?

The turnover ratio or turnover rate is the percentage of a mutual fund, ETF, or other portfolio’s holdings that have been replaced in a given year (calendar year or whichever 12-month period represents the fund’s fiscal year).

Real-life Application: XYZ mutual fund that invests in 100 stocks and replaces 50 stocks during one year has a turnover ratio of 50%.

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