Portfolio Churning / Portfolio Turn over

[Manoj_Sharma_6OfNb (Manoj Sharma)]

Hello Team,



How to calcuate the portfolio turnover ratio if our portfolio consisting of N no. of stocks having different weights & overall portfolio is rebalcning at regular interval lets say weekly or monthly

[Rushda_Ansari_A8OBX (Rushda Ansari)]

Hey Manoj,



The steps to calculate the portfolio turnover ratio are as follows:

1. Sum up the total stocks bought during the year
   
2. Sum up the total stocks sold during the year
   
3. Compute the average monthly net assets throughout the year
   
4. Divide the minimum of either the stocks bought or sold by the average monthly net asset.
   
   
   
   To explain further, let's consider this example:
   
   Let's say you bought 10 stocks of Apple for $100 and 8 stocks of Tesla for $80. The average monthly net asset of your portfolio is $1000. In that case, the portfolio turnover will be 8% (80/1000 x 100 = 0.08).
   
   
   
   This formula applies to rebalanced portfolios as well, irrespective of the rebalancing frequency.
   
   
   
   Hope you find this helpful!
   
   
   
   Thanks,
   
   Rushda Ansari