According to research from European fund manager SMA Gestion, most active managers “turn” their portfolio on average approximately once a year, which means that the holding period of investments does not exceed one year. Multiple studies (from Sharp in 1991 to Elton in 1993 to French in 2008) show that there’s a strong correlation between portfolio turnover and a fund’s net return. The higher the turnover, the worse the performance. Why exactly managers are driven to churn their portfolios in such a way, when it should be their aim to minimise trading and protect investors from sentiment driven swings, is…
Time Is The Investors’ Best Friend
Sign up now and get our in-depth FREE e-books on famous investors like Klarman, Dalio, Schloss, Munger Rupert is a committed value investor and regularly writes and invests following the principles set out by Benjamin Graham. He is the editor and co-owner of Hidden Value Stocks, a quarterly investment newsletter aimed at institutional investors. Rupert owns shares in Berkshire Hathaway. Rupert holds qualifications from the Chartered Institute For Securities & Investment and the CFA Society of the UK. Rupert covers everything value investing for ValueWalk