Checking Management Fees and Turnover Rates

Checking Management Fees and Turnover Rates

Some investors try to evaluate the management fees and portfolio turnover rate of a fund. In most cases this nit-picking is not necessary.

In my experience, some of the best-performing growth funds have higher turnover rates. The Fidelity Magellan Fund, during its three biggest performance years, averaged an annual turnover rate of over 350%.

You can't be active and on top of the market and do nothing. A good fund manager will sell
stocks when he or she is worried about the overall market or a specific group, believes a stock is overvalued, or finds another, more attractive stock to purchase. That's what you hire a professional to do. Also, institutional commission rates that funds pay are extremely low, only a few cents per share of stocks bought or sold.


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