Slideshow Does aggressive turnover hurt fund returns?

Published
  • October 04 2017, 3:36pm EDT
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Clients who seek a buy-and-hold mutual fund portfolio can still rack up higher trading costs and taxes when their funds are regularly and aggressively buying and selling.

If a fund manager sells every stock in a given year, the fund will have a turnover rate of 100%. For actively managed funds, a certain level of turnover is expected. Indeed, the industry average is roughly 89%, according to the Motley Fool.

Higher trading costs are one ramification of significant buying and selling. Of the 20 funds on our list, 13 are higher than 1%; another three are higher than 90 basis points.

We created a list of funds with at least $100 million in assets and with the highest turnover ratios. We ranked those funds by three-year returns.

The average turnover rate of these 20 funds is 161%; the average expense ratio is 1.2%; and the average three-year return is 14.2%. Click through to see which funds made the list.

All data from Morningstar Direct.

20. Victory RS Growth (RSGRX)

3-Yr. Return: 11.81%
Turnover Ratio: 123%
Expense Ratio: 1.10%
Total Assets (millions): $253

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19. Alger SMid Cap Focus (ALMAX)

3-Yr. Return: 11.93%
Turnover Ratio: 164%
Expense Ratio: 1.35%
Total Assets (millions): $184

18. MassMutual Premier Disciplined Gr (DEIGX)

3-Yr. Return: 11.95%
Turnover Ratio: 124%
Expense Ratio: 0.71%
Total Assets (millions): $385

17. Calvert Small Cap (CCVAX)

3-Yr. Return: 12.22%
Turnover Ratio: 150%
Expense Ratio: 1.36%
Total Assets (millions): $299

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16. Driehaus International Small Cap Growth (DRIOX)

3-Yr. Return: 12.28%
Turnover Ratio: 151%
Expense Ratio: 1.72%
Total Assets (millions): $310

15. Virtus Rampart Enhanced Core Equity (PDIAX)

3-Yr. Return: 12.36%
Turnover Ratio: 496%
Expense Ratio: 1.21%
Total Assets (millions): $186

14. American Century Small Cap Growth Inv (ANOIX)

3-Yr. Return: 12.45%
Turnover Ratio: 130%
Expense Ratio: 1.36%
Total Assets (millions): $507

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13. Ivy Small Cap Core (IYSAX)

3-Yr. Return: 12.48%
Turnover Ratio: 133%
Expense Ratio: 1.50%
Total Assets (millions): $576

12. Fidelity Trend (FTRNX)

3-Yr. Return: 12.50%
Turnover Ratio: 129%
Expense Ratio: 0.74%
Total Assets (millions): $1,691

11. JPMorgan Large Cap Value (HLQVX)

3-Yr. Return: 12.62%
Turnover Ratio: 145%
Expense Ratio: 0.77%
Total Assets (millions): $1,205

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10. Oberweis International Opportunities (OBIOX)

3-Yr. Return: 12.74%
Turnover Ratio: 139%
Expense Ratio: 1.60%
Total Assets (millions): $889

9. T. Rowe Price Global Stock (PRGSX)

3-Yr. Return: 13.18%
Turnover Ratio: 135%
Expense Ratio: 0.89%
Total Assets (millions): $790

8. CornerCap Small-Cap Value Investor (CSCVX)

3-Yr. Return: 14.30%
Turnover Ratio: 129%
Expense Ratio: 1.30%
Total Assets (millions): $119

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7. TCM Small Cap Growth (TCMSX)

3-Yr. Return: 14.85%
Turnover Ratio: 134%
Expense Ratio: 0.96%
Total Assets (millions): $374

6. Deutsche Science and Technology (KTCAX)

3-Yr. Return: 15.35%
Turnover Ratio: 171%
Expense Ratio: 0.99%
Total Assets (millions): $750

5. Zacks Small-Cap Core Inv (ZSCCX)

3-Yr. Return: 15.41%
Turnover Ratio: 147%
Expense Ratio: 1.39%
Total Assets (millions): $140

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4. Wells Fargo Specialized Technology (WFSTX)

3-Yr. Return: 15.78%
Turnover Ratio: 131%
Expense Ratio: 1.41%
Total Assets (millions): $394

3. Fidelity Small Cap Growth (FCPGX)

3-Yr. Return: 17.09%
Turnover Ratio: 140%
Expense Ratio: 1.09%
Total Assets (millions): $3,428

2. Driehaus Micro Cap Growth (DMCRX)

3-Yr. Return: 18.63%
Turnover Ratio: 180%
Expense Ratio: 1.48%
Total Assets (millions): $326

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1. T. Rowe Price Global Technology (PRGTX)

3-Yr. Return: 23.45%
Turnover Ratio: 171%
Expense Ratio: 0.90%
Total Assets (millions): $5,535