What is the capital turnover rate?
Capital turnover rate, also known as shareholding turnover rate, is a parameter used to measure the average time of holding securities and the frequency of investment transactions, and is also an important indicator to examine the operation style of capital investment.
The turnover rate of the fund can be calculated by the following formula:
The turnover rate of the fund = (the total cost of buying stocks+the total income of selling stocks)/the average daily size of the fund during the statistical period.
So how do we understand it?
Suppose the turnover rate of a fund in the past year is 100%, that is, all the stocks held by the fund have changed hands in the past year. Assuming that the turnover rate of this fund is 200% this year, it means that the shares held by this fund have been changed twice this year.
However, this is not the case in practice. It won't be said that all stocks have been completely changed, but some stocks will be changed more frequently.
What does capital turnover mean?
As mentioned above, the capital turnover rate is not only an index to measure the average time of holding securities and the frequency of investment transactions, but also an important index to examine the investment style of funds. So the turnover rate of the fund is related to the investment style of the fund.
For us ordinary investors, we can understand the investment style of fund managers through the turnover rate of funds.
If the turnover rate of the fund is relatively high, it shows that the fund has a strong sense of active management and is more inclined to do band operation, seize investment opportunities in the market and operate frequently.
If the turnover rate is relatively low, it shows that the fund manager is relatively stable and has a strong determination to his investment strategy and the stocks he chooses. Very optimistic about the future growth space of individual stocks.
Of course, the comparison of turnover rate should be in the same time dimension and the same fund type. For example, in a bull market, the turnover rate of funds will be higher than that in a bear market, while the turnover rate of active funds will be higher than that of passive funds.
The turnover rate of the fund does not determine the income of the fund.
Some institutions have done real data calculation, divided the turnover rate of partial stock hybrid funds into several different groups according to the interval, and then calculated the fund return rate within the turnover rate level of each group.
The results show that:
Under different interval turnover rates, the interval return rate of funds did not show obvious trend.
How to choose funds through turnover rate?
If the market hotspots change rapidly and the plate rotates violently, then the funds with higher turnover rate are more likely to obtain higher returns by grasping the market hotspots.
However, if it is in a bear market, the higher turnover rate may lead to an increase in the transaction cost of the fund.
If you consider long-term investment, it is recommended to choose a fund with low turnover rate, because it pays more attention to long-term shareholding and has higher stability.
I hope the above contents are helpful to you.