Turnover is a driver of trading costs, high turnover say 100% indicates higher trading costs.
The Hidden Cost of Mutual Funds
WSJ March 1, 2010
“How much does it cost you to own a mutual fund? Probably a lot more than you think.
In selecting mutual funds, most investors know to check the expense ratio, the standard measure of how costly a fund is to own. U.S.-stock funds pay an average of 1.31% of assets each year to the portfolio manager and for other operating expenses, according to Morningstar Inc.
But that’s not the real bottom line. There are other costs, not reported in the expense ratio, related to the buying and selling of securities in the portfolio, and those expenses can make a fund two or three times as costly as advertised….”
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