![]() ![]() ![]() That said, share turnover is interesting as a measure because the correlations don't always hold up. It compares the number of shares that change hands during a particular period with the total number of shares that could have been traded during that same period. Investors may be unwilling to put their money at risk by acquiring the shares of a company with low share turnover. Share turnover ratio indicates how easy, or difficult, it is to sell shares of a particular stock on the market. A higher share turnover may also indicate momentum if good news or bad news drives trading activity, a stock's share turnover ratio will likely be higher for a given period.On the other hand, funds with a high turnover ratio indicate a. A turnover ratio is the percentage of stocks and other assets in a mutual fund that have been replaced in the course of one year. Funds with a low turnover ratio are called passively managed funds. When the turnover ratio is low, it indicates that the fund manager is following a buy-and-hold investment strategy. For example, let’s say ABC Fund bought stocks worth Rs 800 crore and sold stocks worth Rs 900 crore over the last year the minimum of stocks bought/sold is Rs 800 crore. Turnover rates can vary greatly between different types of mutual funds and exchange-traded funds. Portfolio turnover is calculated by taking the lower of the total of new stocks purchased or sold over 12 months, divided by the fund’s average assets under management (AUM). So a conservative-minded equity investor might target funds with turnover ratios. A mutual fund turnover ratio refers to how often the underlying assets in a specific fund are bought and sold. Stocks with higher share turnover ratios are considered more liquid and easier to buy or sell, while stocks with lower share turnover ratios show stock is more illiquid. Generally speaking, a portfolio turnover ratio is considered low when the ratio is 30 or lower. For example, the average turnover ratio for managed mutual funds is 75115.Because it only speaks to the quantity and not the quality, share turnover should not be used as a primary investing criterion.Share turnover does not signal anything about the quality of the stock or why, for the period being measured, it may be more or less liquid than other stocks.Share turnover reflects the liquidity of a market by dividing trading volume over outstanding supply for a given period. ![]()
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