portfolio turnover investment & finance definition

The frequency with which stocks and other investments are bought and sold within a portfolio. A high turnover ratio isn’t usually positive, as it means that the portfolio manager spends a large amount of money on trading commissions. High turnover also likely means that the gains are taxed as ordinary income rather than at the long-term capital gains rate, which is lower. A mutual fund’s portfolio turnover ratio is disclosed in its prospectus.