what is portfolio turnover 
turnover is a term that is also used for investments in this context turnover measures the percentage of an investment portfolio that is sold in a set period for instance assume a mutual fund has 100 million in assets under management and the portfolio manager sells 20 million in securities during the year the rate of turnover is 20 million divided by 100 million or 20 a 20 portfolio turnover ratio could be interpreted to mean that the value of the trades represented one fifth of the assets in the fund however it might also indicate a need to investigate further and determine why the mutual fund needed to replace 20 of its holdings in one year in some cases the fund s manager might be churning the portfolio or replacing holdings to generate commissions portfolios that are actively managed should have a higher rate of turnover while a passively managed portfolio may have fewer trades during the year the actively managed portfolio will generate more trading costs which reduces the rate of return on the portfolio investment funds with excessive turnover are often considered to be low quality asset turnoverthe asset turnover ratio measures how well a company generates revenue from its assets during the year asset turnover total sales beginning assets ending assets 2 where total sales annual sales total beginning assets assets at start of year ending assets assets at end of year begin aligned text asset turnover frac text total sales frac text beginning assets text ending assets 2 textbf where text total sales text annual sales total text beginning assets text assets at start of year text ending assets text assets at end of year end aligned asset turnover 2beginning assets ending assets total sales where total sales annual sales totalbeginning assets assets at start of yearending assets assets at end of year you can also use just the assets at the end of the period instead of the average for the year to calculate the ratio investors use this ratio to compare similar companies in the same sector or group 