Turnover Rate Definition

Learn the definition of turnover rate and other ETF terminology from the etf.com glossary.

ETF
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Reviewed by: etf.com Staff
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Edited by: etf.com Staff

Learn more about Turnover Rate

Turnover Rate in ETFs is a crucial metric reflecting the frequency of buying and selling assets within the fund's portfolio. A lower turnover rate signifies a buy-and-hold strategy, reducing transaction costs and minimizing capital gains distributions. ETFs with lower turnover rates are often favored by investors with a long-term horizon, as they align with a passive investment approach. This measured approach to portfolio management enhances tax efficiency, offering investors a stable and cost-effective means of participating in the market while adhering to a disciplined and low-impact investment strategy.

Related Terms

Exchange-Traded Fund

ETF Glossary is etf.com’s collection of key terms and definitions related to exchange-traded funds. ETFs are investment funds that are traded on stock exchanges, and they can encompass a wide range of asset classes, including stocks, bonds, commodities and more. Given the diverse range of ETFs and the complexity of financial markets, having a clear understanding of ETF-related terminology is instrumental for investors looking to make informed decisions, manage risks effectively and navigate the evolving landscape of ETF investments.