Mutual Fund Investment Portfolio Turnover Ratios Are High Recently

Mutual fund investment portfolio turnover ratios have gone up for many equity funds, over the past six months.

About 10 to 15 equity mutual fund schemes recorded a turnover of at least 200 percent or more in the past six months, based on data registered in Value Research. Before November 2017, only eight schemes in the months before November 2017.

Generally, every month the fund houses reveal portfolio turnover ratios of the previous 12-month period. For the year ended April 2018, Taurus Large Cap Equity Fund made a turnover ratio of 705 percent.

Four schemes out of the top 12 equity funds ranked with respect to turnover ratios belong to Edelweiss Asset Management Ltd, based on Value Research data. Many equity mutual fund schemes from Edelweiss AMC recorded high turnover ratios.

A major portion of its mutual fund investment portfolio turnover ratios of equity schemes comes due to derivatives’ strategy, said the AMC. The Edelweiss equity MF schemes intentionally utilize derivatives to find the possibility of miss-pricing between cash and corresponding equity market futures in order to maximize its returns.

Some MF experts state that high turnover ratios so far this year have been due to the fall in mid-cap stocks. The BSE Midcap index has fallen by 10.4 percent as of now this year. In order to deal with this fall and to minimize the risks or damage, fund managers have made alterations in their underlying portfolios.

Huge inflows and outflows induce the mutual funds to buy and sell stocks, and that will also have an impact on their turnover ratios.

Mutual fund investment portfolio turnover ratios are considered as a good metric to see how often your fund churns its portfolio. Normally, a turnover ratio of 100 percent is considered to be high. A turnover ratio which is more than 100 percent usually means that the fund manager has completely churned the portfolio once, according to Live Mint.

The post Mutual Fund Investment Portfolio Turnover Ratios Are High Recently appeared first on OWLT Market.

from OWLT Market https://ift.tt/2P9Cgse
via IFTTThttps://ift.tt/2OlCCL9