turnover ratio

For funds, measures how frequently the securities in a mutual fund or exchange-traded fund (ETF) are bought and sold within a given year. A high turnover ratio may indicate more active management and higher trading costs, while a lower ratio often reflects a buy-and-hold approach. The turnover ratio is calculated by dividing the lesser of a fund's total purchases or total sales of securities by its average net assets over a period, expressed as a percentage.